Re: Ripple

Evan, Your collaboration in this discussion is very much appreciated.
Thanks.

Joseph Potvin


On Tue, Nov 19, 2013 at 1:58 PM, Evan Schwartz <evan@ripple.com> wrote:

> So, as much as I might personally like to continue this vein of
> conversation, I think we're straying farther into the economics of XRP than
> I can really speak to.
>
> The way the system stands now is that there are 100 billion XRP, that's
> all there'll ever be, and it's not in our or anyone else's power to change
> that now. Ripple Labs plans to distribute more than 50 billion of those
> through giveaways and promotions. All of the software is open source so
> anyone is free to create a different network governed by different rules.
>
> That being said, we think that the Ripple network as it stands now offers
> the potential to federate different payment systems, facilitate easier,
> cheaper, and faster flows of money than has ever been possible before, and
> all while keeping the state of everyone's balances secure and preventing
> spam.
>
> If anyone is interested in watching the talks that myself and some of the
> others at Ripple Labs gave at the Money2020 conference explaining various
> parts of the Ripple network you can find them here:
> https://ripple.com/blog/ripple-developer-conference-2013-replay/
>
>    - Chris Larsen, the CEO, gave a general overview<https://www.youtube.com/watch?v=oGribd0RnFc>
>    - I gave a technical overview<https://www.youtube.com/watch?v=Siim2SmLFLc>
>    - David Schwartz, the chief cryptographer, gave a talk about architecture
>    and advanced users <https://www.youtube.com/watch?v=NtmPy-0gxWI>
>    - and Stefan Thomas, the CTO, gave a talk about the future focus of
>    the engineering team <https://www.youtube.com/watch?v=-aDiI9e4KoE>
>
> If anyone has more questions about the technical setup of the network or
> how it might be used in conjunction with the work this group is doing, I'd
> be more than happy to try to take a stab at them.
>
> Evan
>
>
> On Mon, Nov 18, 2013 at 4:39 PM, Joseph Potvin <jpotvin@opman.ca> wrote:
>
>> RE: If there weren't some fixed amount of XRP in the system from the
>> beginning, how would you propose making it appear and disappear?
>>
>> The same way you developers made the XRP appear: "poof". There they are!
>> Welcome to fiat money. The same way my mortgage company created the CAD$ to
>> finance my entitlement to a house: "poof". They pretended they "lent" me
>> money that they had prior to issuing the mortgage. And I pretended to go
>> along with the gag. But before the loan, those CAD$ simply did not exist.
>> Same with any loan, credit card, or line of credit, from a fiat-based
>> financial institution. Fiat money is conjured into existence.
>>
>> RE: Who would control that and determine what "as needed" means?
>>
>> An algorithm could conjure XRPs into and out of existence in any
>> proportion needed to facilitate the velocity of Ripple transactions.  What
>> do you think Ben Bernanke et al have been doing?
>>
>> RE: Also, what exactly would be the benefit from pegging the value of XRP
>> to something outside of the network? How would that make it a better unit
>> of account than if it's just a digital currency whose value in terms of
>> other currencies is just set by the market?
>>
>> (a) I haven't see a "unit of account" use case for XRPs.  I do see a
>> "medium of exchange" use case in web payments.
>> (b) The "set by the market" is what I was asking you about earlier. It's
>> not really a market in its own right. Even A3, the flesh and blood person
>> would really just make guesses that combine what my A1 algorithm and A2
>> algorithm were linking to. While there is a supply and demand market for
>> currencies, its operation is completely overwhelmed by the speculative
>> market that operates for the most part in an opposite way than the supply
>> and demand market. It's certainly not anything like the markets for copper,
>> or car repair services or bananas.
>>
>> RE: The use case for people holding XRP is the same as the reason people
>> are holding (and buying copious amounts of) bitcoin. It's an asset that may
>> rise (and fall) in value
>>
>> And in both cases, those are pure speculation plays.  I propose that XRP
>> has a use case other than speculation, and to the extent it's given a
>> speculative character, that's an unnecessary and even possibly a flaw
>> that's harmful to the operational advatanges of Ripple. Suppose some
>> community takes the free/libre code and sets up Zipple, which maintains
>> just enough ZRPs to handle the variable transaction need for web payments,
>> but otherwise maintains no stock of ZRPs?  Say the operator earns its
>> income on a transaction fee modelled on the Tobin Tax.  Would that be less
>> useful to the transacting parties in web payments?
>>
>> Joseph Potvin
>>
>>
>>
>>
>> On Mon, Nov 18, 2013 at 7:09 PM, Evan Schwartz <evan@ripple.com> wrote:
>>
>>> If there weren't some fixed amount of XRP in the system from the
>>> beginning, how would you propose making it appear and disappear? Who would
>>> control that and determine what "as needed" means?
>>>
>>> Also, what exactly would be the benefit from pegging the value of XRP to
>>> something outside of the network? How would that make it a better unit of
>>> account than if it's just a digital currency whose value in terms of other
>>> currencies is just set by the market?
>>>
>>> The use case for people holding XRP is the same as the reason people are
>>> holding (and buying copious amounts of) bitcoin. It's an asset that may
>>> rise (and fall) in value, our intention is to focus on making the payment
>>> highly useful but some people may get into it just to speculate on XRP.
>>> We're envisioning that more people who are holding XRP will be using it to
>>> facilitate exchanges between XRP and all of the other currencies on the
>>> network.
>>>
>>>
>>> On Mon, Nov 18, 2013 at 1:52 PM, Joseph Potvin <jpotvin@opman.ca> wrote:
>>>
>>>> Thanks Evan. It's certainly an interesting "thing". Please permit me to
>>>> pursue the XRP a little further to be clear about what sort of thing it is.
>>>> Money has three essential use cases: (1) a medium of exchange, (2) a
>>>> unit of account, (3) a standard of deferred payment (requiring that it
>>>> be a stable store of value). It seems to me that XRP has only one
>>>> defensible use case, which is to be a hyper-efficient medium of exchange
>>>> for web payments. I see no use case at all for it being treated a unit of
>>>> account (hence my quip about saying it might as well be declared equal in
>>>> value to a banana), and I see no use case for it being treated as a store
>>>> of value (also why I chose the banana, which has a well-known short
>>>> half-life).
>>>>
>>>> Why is the XRP not designed to just appear and disappear as needed,
>>>> like a synthetic element in the periodic table. What's the use case for
>>>> anyone or for Ripple Labs to "hold" any XRPs?
>>>>
>>>> Borrowing from someone else's thought: If XRP currently trades for ~100
>>>> XRP per 1 USD then 50 billion XRP retained by Ripple Labs and its investors
>>>> is currently valued at 500 million USD in "goodwill". The only use case I
>>>> can think of for that is to make Ripple Labs and its investors really happy
>>>> as long as it lasts. I'm not against anyone making a bunch of money on
>>>> creativity and carrying risk, but that's a separate matter. Is there any
>>>> use case in that big stock of XRP from the perspective of the parties to
>>>> web payments?
>>>>
>>>> Joseph Potvin
>>>>
>>>> On Mon, Nov 18, 2013 at 4:08 PM, Evan Schwartz <evan@ripple.com> wrote:
>>>>
>>>>> ripplescam.org actually hasn't posted anything since Ripple was open
>>>>> sourced in September. The fact that the rippled code wasn't immediately
>>>>> open sourced seems to have been the main gripe there.
>>>>>
>>>>> The purpose of having XRP in the network as an asset is twofold: first
>>>>> it helps bridge between different currencies and second it's used for very
>>>>> small transaction fees that help prevent people from spamming the network.
>>>>>
>>>>> Right now the transaction fees are worth something like .0000001 USD
>>>>> so most users won't notice them much, but it adds up quickly if you're
>>>>> trying to spam the ledger or the network with junk transactions. In order
>>>>> to do transactions on the network you need to be holding some XRP, so it
>>>>> needs to be a "holdable" asset.
>>>>>
>>>>> When you "pay" the fee though we're not collecting that money, rather
>>>>> it is being destroyed by the network (which has the effect of slightly
>>>>> raising the value of everyone's XRP, so you're paying your fee to all of
>>>>> the network users). This is why the fee currency needs to be internal to
>>>>> the network so it can actually destroy some amount. If you go to
>>>>> https://ripple.com/graph/ you can see in the top left how many total
>>>>> XRP there are still in the network.
>>>>>
>>>>> Does that make sense?
>>>>>
>>>>>
>>>>> On Mon, Nov 18, 2013 at 11:42 AM, Joseph Potvin <jpotvin@opman.ca>wrote:
>>>>>
>>>>>> RE: Ripple Labs isn't playing a hoarding game but
>>>>>>
>>>>>> I don't have any opinion on that at this point, but some people think
>>>>>> it is: http://ripplescam.org/  (Sorry if posting that link seems
>>>>>> aggressive. That's not my intent. It's out there and shows up in searches,
>>>>>> so I'm just being forthcoming.)
>>>>>>
>>>>>> RE: "The value of 1 XRP matters to currency traders, Ripple Labs, and
>>>>>> anyone else holding XRP as an asset. "
>>>>>>
>>>>>> That seems entirely unnecessary to me, and a "bug" in the current
>>>>>> business architecture of Ripple. Why permit the holding of XRPs at all? In
>>>>>> the grand scheme of things, what's the value added from their persistence?
>>>>>> I still advocate for 1 XRP = 1 banana, compared with the XRP's current
>>>>>> design. (To see where I'm actually coming from, see:
>>>>>> http://www.bengrahaminvesting.ca/Outreach/2009_Symposium.htm and
>>>>>> http://www.theglobeandmail.com/globe-investor/investment-ideas/commodities-as-a-global-currency/article1346127/
>>>>>> ...although even more I prefer an "Earth Reserve" base, which I and some
>>>>>> colleagues are working on.)  Meanwhile the private consortium aspect of The
>>>>>> Fed is hardly something to be replicated -- the more successful Ripple
>>>>>> becomes, the more suspicion and "divergent" interests it will attract. It
>>>>>> fear it would become the monetary instantiation of The Peter Principle.
>>>>>>
>>>>>> In any case, the value of a BTC or an XRP is nothing more than brand
>>>>>> loyalty, what the accountants call the value of "goodwill", since any
>>>>>> number of parallel currencies just like them can be created.
>>>>>>
>>>>>> Joseph Potvin
>>>>>>
>>>>>>
>>>>>> On Mon, Nov 18, 2013 at 1:56 PM, Evan Schwartz <evan@ripple.com>wrote:
>>>>>>
>>>>>>> Q1: What is it about the A's role, and about the B's role that
>>>>>>>> positions all the A's as currency price makers, and all the B's as currency
>>>>>>>> price takers?
>>>>>>>
>>>>>>>
>>>>>>> Only that the A's have put out offers on the books. Anyone can
>>>>>>> create an offer and it'll be treated equally to anyone else's. In practice
>>>>>>> we expect that certain users will use the system primarily for currency
>>>>>>> trading so you'll see a lot more offers put out by those but as far as the
>>>>>>> system is concerned all accounts have the same potential functionality.
>>>>>>>
>>>>>>>
>>>>>>> Q2: In this model, what are the criteria and information sources
>>>>>>>> that A1, A2 and A3 are assumed to use when offering their preferred amounts
>>>>>>>> of EUR to buy those USD? Anything and everything available to them, correct?
>>>>>>>>
>>>>>>> Yes. They have access to the same network data about existing offers
>>>>>>> as everyone else.
>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>> Q: Can a machine register to and participate in Ripple? Or do all
>>>>>>>> Ripple members need to be flesh&blood people. Is it possible for a machine
>>>>>>>> to join Ripple as if it were a flesh&blood person, and if it did, would the
>>>>>>>> Ripple system or team know or care?  Today, what's the proportion of
>>>>>>>> machine accounts to flesh&blood accounts amongst Ripple subscribers?
>>>>>>>
>>>>>>>
>>>>>>> People can definitely create bots that trade on Ripple. I'm not sure
>>>>>>> it would be possible in any system to stop this from happening and I'm also
>>>>>>> not entirely sure that we'd want to. Modern currency trading seems to be
>>>>>>> more of a machine's game but what we're hoping for is that any human or
>>>>>>> machine traders on the network will facilitate very cheap exchanges between
>>>>>>> currencies, which will let basic users do cross-currency payments at a
>>>>>>> fraction of the cost and time it takes now.
>>>>>>>
>>>>>>>
>>>>>>> Okay, and this order book is determined by all the offers from A1,
>>>>>>>> A2 and A3, however that plays out. Correct?
>>>>>>>>
>>>>>>> Yes.
>>>>>>>
>>>>>>>
>>>>>>> Q: How does an EUR→XRP rate and an XRP→USD rate play into all of
>>>>>>>> this?  Here's what I presume, correct me if I'm wrong...
>>>>>>>>
>>>>>>>> RE:  Transactions can and often do take multiple paths to get the
>>>>>>>> best rate
>>>>>>>>
>>>>>>>> A path is a series of trades underway at a given time, correct,
>>>>>>>> such as USD→CAD with CAD→EUR to get a USD→EUR trade.  And where a suitable
>>>>>>>> path can't be found, the Ripple algorithm will insert XRP. Correct? XRP
>>>>>>>> always fills in gaps.
>>>>>>>>
>>>>>>> In order to do a USD -> EUR trade the system will look at direct USD
>>>>>>> -> EUR paths, USD -> XRP -> EUR paths, and I believe some more indirect
>>>>>>> ones as well. XRP is meant to fill in those gaps so that you don't actually
>>>>>>> need people trading on all of the possible pairs of currencies.
>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>> Q:  Does the value of 1 XRP matter?  As mere gap-filler, I don't
>>>>>>>> think so.  XRP is just grease. Am I wrong?  In what context does the value
>>>>>>>> of 1 XRP really matter?
>>>>>>>
>>>>>>>
>>>>>>> The value of 1 XRP matters to currency traders, Ripple Labs, and
>>>>>>> anyone else holding XRP as an asset. For anyone using the system to make a
>>>>>>> payment the value of XRP won't really matter because their money isn't "in"
>>>>>>> XRP for any real period of time like it would be with Bitcoin if someone
>>>>>>> made a payment USD -> BTC -> EUR outside of the Ripple network. Payments
>>>>>>> are either executed in atomic time or they'll fail if the rates have
>>>>>>> changed dramatically between the time when a price was quoted and when the
>>>>>>> user decided to execute it.
>>>>>>>
>>>>>>>
>>>>>>> Q: Why not set the purchasing power of 1 XRP to the tangible market
>>>>>>>> price of 1 banana?
>>>>>>>>
>>>>>>>> The 100 billion XRP's would thus be valued at about a dozen
>>>>>>>> container ships of bananas
>>>>>>>> http://www.bloomberg.com/news/2013-05-29/maersk-s-8-4-billion-bananas-add-to-ship-profits-freight.html
>>>>>>>> I jest, of course. But my fundamental point here is that if XRP were tied
>>>>>>>> to something tangible, RippleLabs would be trusted not to be playing some
>>>>>>>> sort of massive hoarding game. XRP would be understood to be just grease.
>>>>>>>> ...or bananas.
>>>>>>>>
>>>>>>> Ripple Labs isn't playing a hoarding game but we are hoping that the
>>>>>>> price of XRP, and thus the 25 billion XRP that the company is using to
>>>>>>> sustain itself, appreciates in value. I think most of the people in the
>>>>>>> company would agree with Jeffrey Cliff's earlier comment. We only make
>>>>>>> money if the network we've built and are continuing to improve provides a
>>>>>>> useful service for people.
>>>>>>>
>>>>>>>
>>>>>>> Is this "end user" a price taker?  I'm always interested in the
>>>>>>>> price makers.
>>>>>>>>
>>>>>>> When I say end user I'm generally talking about price takers /
>>>>>>> people trying to make payments
>>>>>>>
>>>>>>>
>>>>>>> More questions?
>>>>>>>
>>>>>>>
>>>>>>> On Mon, Nov 18, 2013 at 3:30 AM, Joseph Potvin <jpotvin@opman.ca>wrote:
>>>>>>>
>>>>>>>> Hello Evan, Thanks for this!
>>>>>>>>
>>>>>>>> RE: If you want to see all of the outstanding offers for any
>>>>>>>> currency pair you can do that directly in the client.
>>>>>>>>
>>>>>>>> So, I see in my UML mind a stickman, whose role is labelled: [Fill
>>>>>>>> in blank, referred to here as A]. There's another one: [Fill in blank,
>>>>>>>> referred to here as B].  Let's say A1, A2 and A3 each want some USD, and
>>>>>>>> each is offering their preferred amounts of EUR to buy those USD.  Let's
>>>>>>>> say B wants some EUR, and so...
>>>>>>>>
>>>>>>>> RE: the path finding engine will search direct and indirect paths
>>>>>>>> for the rate that is best for the initiator.
>>>>>>>>
>>>>>>>> So the path finding engine discovers that A2 is offering B the best
>>>>>>>> rate.
>>>>>>>>
>>>>>>>> Q1: What is it about the A's role, and about the B's role that
>>>>>>>> positions all the A's as currency price makers, and all the B's as currency
>>>>>>>> price takers?
>>>>>>>>
>>>>>>>> Q2: In this model, what are the criteria and information sources
>>>>>>>> that A1, A2 and A3 are assumed to use when offering their preferred amounts
>>>>>>>> of EUR to buy those USD? Anything and everything available to them,
>>>>>>>> correct?
>>>>>>>>
>>>>>>>> Now, the following observation is not meant in any way to challenge
>>>>>>>> Ripple. It's only meant to acknowledge the environment within which Ripple
>>>>>>>> and all the A's and all the B's have to live, for the time being. This is
>>>>>>>> the $5.3 trillion / day forex ecosystem dominated by top predators:
>>>>>>>>
>>>>>>>>
>>>>>>>> http://www.bloomberg.com/news/2013-10-04/swiss-regulator-probes-alleged-foreign-exchange-manipulation.html
>>>>>>>>
>>>>>>>> http://www.usatoday.com/story/money/business/2013/11/15/foreign-exchange-trading-investigation/3573499/
>>>>>>>>
>>>>>>>> http://www.theguardian.com/business/2013/oct/30/barclays-cooperating-investigation-manipulation-currency-markets
>>>>>>>> "Treasury's War" by Juan Zarate
>>>>>>>>
>>>>>>>> http://www.publicaffairsbooks.com/publicaffairsbooks-cgi-bin/display?book=9781610391153
>>>>>>>> "Currency Wars" by James Rickards
>>>>>>>>
>>>>>>>> http://www.us.penguingroup.com/nf/Book/BookDisplay/0,,9781591844495,00.html
>>>>>>>>
>>>>>>>> In this ecosystem, then, I'm wondering from where it is assumed
>>>>>>>> that A1, A2 and A3 get their information to offer their preferred amounts
>>>>>>>> of EUR to buy USD? Let's structure this directly:  Let's say that A1 and A2
>>>>>>>> are machines running unique forex algorithms, and leave A3 as a flesh&blood
>>>>>>>> person. So A3 is somebody who "watches the forex market" and reckons that
>>>>>>>> some amount of EURs for USD is a good bet this afternoon.
>>>>>>>>
>>>>>>>> Q: Can a machine register to and participate in Ripple? Or do all
>>>>>>>> Ripple members need to be flesh&blood people. Is it possible for a machine
>>>>>>>> to join Ripple as if it were a flesh&blood person, and if it did, would the
>>>>>>>> Ripple system or team know or care?  Today, what's the proportion of
>>>>>>>> machine accounts to flesh&blood accounts amongst Ripple subscribers?
>>>>>>>>
>>>>>>>> Let's focus on A1 and A2 machines. What are the most important data
>>>>>>>> feeds that each machine's algorithm might be coded to draw upon in order to
>>>>>>>> generate their EUR-for-USD offers at any given moment?  Let's say A1 is
>>>>>>>> designed to statistically interpret the WM-Reuters spot rate
>>>>>>>> http://www.wmcompany.com/pdfs/026808.pdf and is able to project it
>>>>>>>> correctly by a few hours 60 per cent of the time. And lets say A2 is
>>>>>>>> designed as "a news-trading algorithm. The computer will not be interested
>>>>>>>> at all in long-term value considerations. It will look at semantic
>>>>>>>> relations in news announcements"
>>>>>>>>
>>>>>>>> http://www.lgt-cm.com/shared/.content/publikationen/$verwaltung_publikationen/sciene/The-self-organization-of-markets-LGT-working-paper-v2-1_en.pdf
>>>>>>>>
>>>>>>>> RE: "Regarding the order book and exchange rates, the order book is
>>>>>>>> public and is one of the pieces of information the system uses consensus to
>>>>>>>> determine."
>>>>>>>>
>>>>>>>> Okay, and this order book is determined by all the offers from A1,
>>>>>>>> A2 and A3, however that plays out. Correct?
>>>>>>>>
>>>>>>>> Q: How does an EUR→XRP rate and an XRP→USD rate play into all of
>>>>>>>> this?  Here's what I presume, correct me if I'm wrong...
>>>>>>>>
>>>>>>>> RE:  Transactions can and often do take multiple paths to get the
>>>>>>>> best rate
>>>>>>>>
>>>>>>>> A path is a series of trades underway at a given time, correct,
>>>>>>>> such as USD→CAD with CAD→EUR to get a USD→EUR trade.  And where a suitable
>>>>>>>> path can't be found, the Ripple algorithm will insert XRP. Correct? XRP
>>>>>>>> always fills in gaps.
>>>>>>>>
>>>>>>>> Q:  Does the value of 1 XRP matter?  As mere gap-filler, I don't
>>>>>>>> think so.  XRP is just grease. Am I wrong?  In what context does the value
>>>>>>>> of 1 XRP really matter?
>>>>>>>>
>>>>>>>> The system is not designed for XRP hoarding, like BTC hoarding is
>>>>>>>> done and even encouraged. It seems to me that XRP does what economists do:
>>>>>>>> "Lets assume that this in-between trade did exist to complete the path."
>>>>>>>> Then act as if it does. I don't mean to criticize -- it's a clever thing to
>>>>>>>> do. But some have expressed concern that Ripple Labs is hoarding all the
>>>>>>>> XRP, and that they will increase in value. So how about this:
>>>>>>>>
>>>>>>>> Q: Why not set the purchasing power of 1 XRP to the tangible market
>>>>>>>> price of 1 banana?
>>>>>>>>
>>>>>>>> The 100 billion XRP's would thus be valued at about a dozen
>>>>>>>> container ships of bananas
>>>>>>>> http://www.bloomberg.com/news/2013-05-29/maersk-s-8-4-billion-bananas-add-to-ship-profits-freight.html
>>>>>>>> I jest, of course. But my fundamental point here is that if XRP were tied
>>>>>>>> to something tangible, RippleLabs would be trusted not to be playing some
>>>>>>>> sort of massive hoarding game. XRP would be understood to be just grease.
>>>>>>>> ...or bananas.
>>>>>>>>
>>>>>>>> RE:  all the end user really needs to know about is the amount
>>>>>>>> it'll cost them in the currencies they have to send some amount in another
>>>>>>>> currency to someone else
>>>>>>>>
>>>>>>>> Is this "end user" a price taker?  I'm always interested in the
>>>>>>>> price makers.
>>>>>>>> Joseph Potvin
>>>>>>>>
>>>>>>>>
>>>>>>>>
>>>>>>>> On Sun, Nov 17, 2013 at 10:36 PM, Evan Schwartz <evan@ripple.com>wrote:
>>>>>>>>
>>>>>>>>> Hi all,
>>>>>>>>>
>>>>>>>>> I am one of the engineers at Ripple Labs. I've been with the
>>>>>>>>> company for 3 months so I can speak to a fair number of these points but
>>>>>>>>> for the nitty gritty details of how consensus works I'll bring our chief
>>>>>>>>> cryptographer David Schwartz into the conversation.
>>>>>>>>>
>>>>>>>>> Regarding the order book and exchange rates, the order book is
>>>>>>>>> public and is one of the pieces of information the system uses consensus to
>>>>>>>>> determine. If you want to see all of the outstanding offers for any
>>>>>>>>> currency pair you can do that directly in the client.
>>>>>>>>>
>>>>>>>>> When someone wants to make a trade or do a cross currency payment
>>>>>>>>> the path finding engine will search direct and indirect paths for the rate
>>>>>>>>> that is best for the initiator. If you want to see visuals of these paths
>>>>>>>>> happening you can go to ripple.com/graph and click on a
>>>>>>>>> transaction entry to see a visualization of the paths. Transactions can and
>>>>>>>>> often do take multiple paths to get the best rate but all the end user
>>>>>>>>> really needs to know about is the amount it'll cost them in the currencies
>>>>>>>>> they have to send some amount in another currency to someone else. If you
>>>>>>>>> take a look at the Send tab in the client and have a couple of different
>>>>>>>>> currencies in your wallet you can see this functionality in action.
>>>>>>>>>
>>>>>>>>> Happy to try to answer any more questions you all have, I think
>>>>>>>>> there's a lot of opportunity for collaboration between Ripple and this
>>>>>>>>> group.
>>>>>>>>>
>>>>>>>>> Evan
>>>>>>>>> On Nov 17, 2013 3:25 PM, "Joseph Potvin" <jpotvin@opman.ca> wrote:
>>>>>>>>>
>>>>>>>>>> Thanks,
>>>>>>>>>>
>>>>>>>>>> RE: it has an order book and the market determines the price
>>>>>>>>>>
>>>>>>>>>> How exactly?  And is the order book and associated process
>>>>>>>>>> documented somewhere? I'd love to see the UML sequence or activity diagram,
>>>>>>>>>> for example, but text will do.
>>>>>>>>>>
>>>>>>>>>> Is the general user experience that of a price-maker or
>>>>>>>>>> price-taker? A currency "price maker" is asked to bid. A currency "price
>>>>>>>>>> taker" is shown a rate as a fait-accompli.  And does the user make or take
>>>>>>>>>> the intermediate XRP rate, or the destination currency rate?  (i.e. If Fred
>>>>>>>>>> pays CAD to a vendor who wants to receive USD, he'd want to make or take
>>>>>>>>>> the CAD-USD rate. The CAD-XRP then the XRP-USD rates would be invisible and
>>>>>>>>>> of no concern to him.)
>>>>>>>>>>
>>>>>>>>>> Joseph
>>>>>>>>>>
>>>>>>>>>>
>>>>>>>>>>
>>>>>>>>>> On Sun, Nov 17, 2013 at 5:26 PM, Melvin Carvalho <
>>>>>>>>>> melvincarvalho@gmail.com> wrote:
>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>>> On 17 November 2013 23:24, Joseph Potvin <jpotvin@opman.ca>wrote:
>>>>>>>>>>>
>>>>>>>>>>>> Melvin, Can you point to the specific documentation about how
>>>>>>>>>>>> Ripple determines XRP inter-currency spot exchange rates with all the
>>>>>>>>>>>> central bank currencies,and for BTC? And is there a documented policy for
>>>>>>>>>>>> choosing the official source of exchange rate data for any other present or
>>>>>>>>>>>> future alt crypto currency out there would be added to the Ripple portfolio
>>>>>>>>>>>> of currencies?
>>>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>>> AFIAK it doesnt use a spot rate, it has an order book and the
>>>>>>>>>>> market determines the price.
>>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>> Tx,
>>>>>>>>>>>>
>>>>>>>>>>>> Joseph Potvin
>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>> On Sun, Nov 17, 2013 at 4:32 PM, Melvin Carvalho <
>>>>>>>>>>>> melvincarvalho@gmail.com> wrote:
>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>> On 17 November 2013 22:27, Fabio Barone <holon.earth@gmail.com
>>>>>>>>>>>>> > wrote:
>>>>>>>>>>>>>
>>>>>>>>>>>>>> I should do this as a homework, I apologize,
>>>>>>>>>>>>>>  but I'm currently pretty busy.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> Would someone be so kind and answering these questions about
>>>>>>>>>>>>>> Ripple:
>>>>>>>>>>>>>>  - Is the code open source?
>>>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>> Yes
>>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>>> - Is the protocol they use openly documented,
>>>>>>>>>>>>>>   as openly as bitcoin is?
>>>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>> I can only answer this superficially as I've not written a web
>>>>>>>>>>>>> ripple implementation (yet)
>>>>>>>>>>>>>
>>>>>>>>>>>>> But it seems to be yes: https://ripple.com/wiki/
>>>>>>>>>>>>>
>>>>>>>>>>>>> You only ever know after you've drilled down into every last
>>>>>>>>>>>>> detail ... something I plan to do next year ...
>>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> thanks
>>>>>>>>>>>>>>
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> 2013/11/17 Manu Sporny <msporny@digitalbazaar.com>
>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> On 11/14/2013 04:30 PM, Andrew Miller wrote:
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>> 2. But this doesn't work for public/anonymous networks.
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> Why doesn't it work for public/anonymous networks? Link?
>>>>>>>>>>>>>>> This is Web of
>>>>>>>>>>>>>>> Trust stuff we're talking about, isn't it (chained trust
>>>>>>>>>>>>>>> metrics)?
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>  3. Ripple, on the other hand, takes yet another approach.
>>>>>>>>>>>>>>>> There's no
>>>>>>>>>>>>>>>> global administrator, but nor is there a well-understood
>>>>>>>>>>>>>>>> public
>>>>>>>>>>>>>>>> competition. Instead, individual users are supposed to
>>>>>>>>>>>>>>>> configure
>>>>>>>>>>>>>>>> their clients to identify particular servers they have
>>>>>>>>>>>>>>>> determined
>>>>>>>>>>>>>>>> they trust.
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> Isn't this a good thing? If you allow anyone to pick who
>>>>>>>>>>>>>>> they trust, you
>>>>>>>>>>>>>>> force cooperation in the system, don't you? The idea being
>>>>>>>>>>>>>>> that for the
>>>>>>>>>>>>>>> system to be useful, people need to coordinate and thus
>>>>>>>>>>>>>>> won't pick
>>>>>>>>>>>>>>> participants with whom they entirely disagree with.
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>  Here's where it gets really murky, and I can't figure out
>>>>>>>>>>>>>>>> any set of
>>>>>>>>>>>>>>>> assumptions that actually lead to robust functioning of the
>>>>>>>>>>>>>>>> network.
>>>>>>>>>>>>>>>> What if users entirely disagree with which servers they
>>>>>>>>>>>>>>>> trust?
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> Why would someone deliberately do this? If you have to pick
>>>>>>>>>>>>>>> from 32
>>>>>>>>>>>>>>> servers, why would you pick from 32 servers that are in a
>>>>>>>>>>>>>>> completely
>>>>>>>>>>>>>>> different trust set? It would be incredibly difficult to do
>>>>>>>>>>>>>>> that in a
>>>>>>>>>>>>>>> dependency chain based system, wouldn't it?
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>  Are they on two different networks or the same one?
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> No idea.
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>  If an individual doesn't do their due diligence, and
>>>>>>>>>>>>>>>> carelessly
>>>>>>>>>>>>>>>> approves bad servers, are they individually affected or
>>>>>>>>>>>>>>>> does it
>>>>>>>>>>>>>>>> affect the overall network?
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> I'd expect that in the worst case, the overall network
>>>>>>>>>>>>>>> suffers. However,
>>>>>>>>>>>>>>> the likelihood of this is in the 51% attack against the
>>>>>>>>>>>>>>> Bitcoin network
>>>>>>>>>>>>>>> category, isn't it?
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>  I really wish more people were looking into this rather
>>>>>>>>>>>>>>>> than ignoring
>>>>>>>>>>>>>>>> it, because I suspect it's not sound (although I haven't
>>>>>>>>>>>>>>>> come up with
>>>>>>>>>>>>>>>> a super clear explanation why not), and if the underlying
>>>>>>>>>>>>>>>> assumptions
>>>>>>>>>>>>>>>> aren't sound then does it matter if the frontend UI is
>>>>>>>>>>>>>>>> great?
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> Well, yeah, if the algorithm is broken then no UI in the
>>>>>>>>>>>>>>> world is going
>>>>>>>>>>>>>>> to save it. However, I don't think you've explained quite
>>>>>>>>>>>>>>> why Ripple's
>>>>>>>>>>>>>>> consensus algorithm is broken. Why is allowing individuals
>>>>>>>>>>>>>>> to pick whom
>>>>>>>>>>>>>>> they trust a bad thing (when the number of servers is large
>>>>>>>>>>>>>>> enough)?
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>  Unfortunately the only set of assumptions I can think of
>>>>>>>>>>>>>>>> that lead
>>>>>>>>>>>>>>>> to this actually working is where every one essentially
>>>>>>>>>>>>>>>> picks the
>>>>>>>>>>>>>>>> same default list, and the servers on that list are actually
>>>>>>>>>>>>>>>> trustworthy.
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> I think the problem surfaces when a group of servers create
>>>>>>>>>>>>>>> a trust set
>>>>>>>>>>>>>>> that has no intersection with another set of servers. With
>>>>>>>>>>>>>>> that said,
>>>>>>>>>>>>>>> why would anyone do this? What's the attack?
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>  This is the "centralized" option, where the default list
>>>>>>>>>>>>>>>> determines
>>>>>>>>>>>>>>>> who participates, and no user has any incentive to deviate
>>>>>>>>>>>>>>>> from the
>>>>>>>>>>>>>>>> default list, either by adding some newcomer they
>>>>>>>>>>>>>>>> individually trust
>>>>>>>>>>>>>>>> or by removing default servers they don't trust.
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> I thought that only a subset of the list needs to be trusted
>>>>>>>>>>>>>>> for Ripple
>>>>>>>>>>>>>>> to function, and all trust sets that all servers choose have
>>>>>>>>>>>>>>> to overlap
>>>>>>>>>>>>>>> by at least a small degree. Is that not true?
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> -- manu
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> --
>>>>>>>>>>>>>>> Manu Sporny (skype: msporny, twitter: manusporny, G+: +Manu
>>>>>>>>>>>>>>> Sporny)
>>>>>>>>>>>>>>> Founder/CEO - Digital Bazaar, Inc.
>>>>>>>>>>>>>>> blog: Meritora - Web payments commercial launch
>>>>>>>>>>>>>>> http://blog.meritora.com/launch/
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>
>>>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>> <http://goo.gl/Ssp56>
>>>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>>
>>>>>>>>>>
>>>>>>>>
>>>>>>>>
>>>>>>>> <http://goo.gl/Ssp56>
>>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>> --
>>>>>>> Evan Schwartz
>>>>>>> Developer + Technology Pioneer
>>>>>>> Ripple Labs Inc.
>>>>>>>
>>>>>>>
>>>>>>>
>>>>>
>>>>>
>>>>> --
>>>>> Evan Schwartz
>>>>> Developer + Technology Pioneer
>>>>> Ripple Labs Inc.
>>>>>
>>>>>
>>>>>
>>>>
>>>>
>>>>
>>>> <http://goo.gl/Ssp56>
>>>>
>>>
>>>
>>>
>>> --
>>> Evan Schwartz
>>> Developer + Technology Pioneer
>>> Ripple Labs Inc.
>>>
>>>
>>>
>>
>>
>> --
>> Joseph Potvin
>> Operations Manager | Gestionnaire des opérations
>> The Opman Company | La compagnie Opman
>> http://www.projectmanagementhotel.com/projects/opman-portfolio
>> jpotvin@opman.ca
>> Mobile: 819-593-5983
>> LinkedIn (Google short URL): http://goo.gl/Ssp56
>>
>
>
>
> --
> Evan Schwartz
> Developer + Technology Pioneer
> Ripple Labs Inc.
>
>
>


<http://goo.gl/Ssp56>