Quote from: JoelKatz on May 28, 2013, 02:08:20 AM

Quote from: timeofmind on May 27, 2013, 09:35:54 PM

What if a very large, well-trusted gateway goes bankrupt? Or is shutdown by authorities?

Money can be lost. The trust extended to a gateway should be rationally balanced against the benefits of that trust.

This has only a minimal affect on people who use gateways to facilitate payments -- only money that's "in transit" is at risk. If you figure a respected gateway has, say, a 5% chance of going bankrupt or being shut down in a year and will be holding 5% of your yearly gross at a time, that's functionally equivalent to a .25% cost. Compared to 2% for credit cards, that's wonderful.

However, it can have a significant affect on people who use gateways as a store of value. For that, you really want gateways that are insured. This is a great application for Bitcoins, IMO.

In the current "real-world" setup, money is either held by a bank and FDIC insured to $250K or advanced by a credit card company. So, there is no "default risk" unless the FDIC goes down. In the Ripple system, neither the store of value nor the transit value is insured. This seems like a real negative currently.