Quote from: bitCooper on December 01, 2012, 03:05:01 AM

Philosophically, I wonder if lending will ever really make sense without very large entities who are being audited by the government. Banks are all about trust, after all. I know that banks won't steal my money because they have decades of history, boards overseeing activities, etc. And the idea of lending to friends might seem appealing, but I think it's bad for friendships.

You're afraid of OTC members building a reputation, then absconding with funds once the payoff is large enough? Why are you not afraid of government-approved banks, some of which have spent a century building strong reputations, stealing client funds and joking about doing so while in the elevator?

Same difference, except in regard to scale (both time and population affected). Exchange with Ripple would be able to grow as large as major banks or remain as small as P2P, trust becomes more transparently assessed than it is now, and recovery to a baseline could occur much more quickly than in the obfuscated financial arena that exists today.

Multiple, dynamic layers exist in finance. At the base is a numeraire, which acts as the foundation of a monetary system. Next comes a network system, big or small, to make use of the numeraire by moving it around. Then there are higher level services that fill various niche demands, built upon the prior two.

Here's how I see Bitcoin, Open Transactions, and Ripple:

Bitcoin (just like gold, the USD, Euro, Yen, etc.) acts as numeraire.
Ripple provides a method of moving the numeraire - any numeraire. Incidentally, Bitcoin also provides a transaction system, but exclusively for its own units; dollars and euros cannot be moved within the Bitcoin network.
Open Transactions is sort of an umbrella service that affords interaction between various different types of networks, both legacy and modern. By encompassing the contemporary as well as the new, it builds a bridge from the traditional financial system to that found with Bitcoin and Ripple.

For comparison:

System:	Comparable To:	Tier (primary in bold):
Bitcoin	Gold, USD (Visa, MC)	1,2
Ripple	Visa, MasterCard	2,3
OT	Basic & complex banking services	2,3

With all three, adapted methods of gaming the system will eventually arise, just as the current ones have been abused. Still, the trio offer massive advancements over contemporary solutions and provide immense opportunities.

* I am speculating to a large degree on Ripple's latest incarnation, and to a lesser extent with regard to Open Transactions; my information could be mistaken.