Quote from: JoelKatz on April 14, 2013, 06:07:02 AM

Quote from: evoorhees on April 14, 2013, 05:13:39 AM

Ripple may be a great way to trade in normal fiat currencies, but I don't really care to do that anymore, now that Bitcoin exists. Yes, it's true that Ripple has XRP which is a cryptocurrency with many similar features to Bitcoin, but it offers no advantage over Bitcoin, and thus why do I care to use it? I might as well use LiteCoin Tongue

The primary advantage is seamless interoperation with fiat currencies. Sure, this calculus would be different if we lived in a world where fiat currencies were irrelevant, but at a minimum, that's a long way off.

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Ripple supporters will say that XRP is superior because it doesn't require mining, but this is a seriously contentious issue - let's remember that the Bitcoin mining process is not arbitrary. It introduces a specific type of security based on proof of work. While Ripple removes the proof of work concept, it may not require burning CPU cycles, but it is thus not protected by any proof of work system. Maybe proof of work isn't necessary, but Ripple will need to prove that over time, whereas Bitcoin's system has proven amazingly resilient over four years in the wild, with every hacker in the universe trying to exploit it.

Personally, I've never agreed with the "mining is a waste of resources" crowd. And I agree that Bitcoin's proof of work system has proved to work extremely well while Ripple's consensus system is relatively unproven. I personally was a skeptic at first, both believing that the technical obstacles were insurmountable and that the result would be brittle.

I'm personally convinced we'll have roughly the same degree of success in this area as Bitcoin has. Will there be problems? I'm pretty confident there will be. Might there be real double spends and rollbacks if something goes horribly wrong? I can't promise there won't be. Will the system survive and be stronger because of it? I'm quite confident it will be.

We designed Ripple after seeing the strengths and weaknesses of Bitcoin's proof of work system. The biggest weakness is a 51% attack. If that happens, fixes get really ugly. For example, changing the mining algorithm would cause all miners using ASICs to lose their investments in ASICs. Basically, you are trusting that the majority of mining power will be in honest hands forever.

So we reduced the problem to one of agreeing on a transaction order and established a mechanism just to do that. In addition, we designed a scheme that doesn't rely on rewriting the past rather than one that is based around doing this. And we ensured you could always tell whether others were on the same "blockchain" you were and that network splits were detectable.

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Ripple is far more centralized than Bitcoin. I worry if it took off, it'd suffer the same fate as eGold. It's very unclear what power OpenCoin (the company behind Ripple) actually holds over the system. Today, OpenCoin holds basically all power. They claim that in the future OpenCoin will "release" this power out into the wild and the company will no longer be centrally important. I am extremely skeptical of this. I'm also extremely skeptical that OpenCoin can't/won't create more XRP's, and it bothers me that it's structured in a way to dish out the existing XRP's from a central postion (I see uncomfortable similarities with how central banks operate, though I'm not ideologically opposed to Ripple since it's voluntary).

You really don't see how enormously to our benefit it is to decentralize the network? Do you think Satoshi was a fool when he opened Bitcoin to the public and decentralized it? Do you think he would have done better had he tried to control it? Any monetary system that betrays the commitments it makes slits its own throat. Long before it will make any sense for OpenCoin to create more XRP, it won't have that power. All of these things are in our interest.

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Further, I think the following is a fair statement: Any company that enables private (non ID verified) person-to-person transactions will be taken down by the US government, period. I believe it is far more likely that OpenCoin/Ripple will be forced to submit to the regulatory apparatus, and will at some point (though its advocates will deny this) require ID verification and all the AML/KYC compliance that a company like Paypal faces. If they do this, the system is pointless. If they don't comply, they will have to close and Ripple will be on its own. I am unsure what kind of community is there to support and build Ripple in the future if the OpenCoin company shut down, as its early-phase development has been structured like a startup (with the founders earning salary and getting paid in "stock" ie - XRP's).

We expect gateways, which handle the movement of actual money, will be subject to AML/KYC compliance issues. We have excellent legal advice and we will continue to follow it. You are certainly correct that this is a major issue.

Joel, once again a long post claiming a list of noble attributes but totally lacking any substantive details about how they are to be implemented.

Just release the source code and let us decide once and for all.