The true test will be when someone forks a version and removes XRP. XRP seems like a pretty artificial add-on to the whole system.
I'd still prefer something like Open Transactions which supports blinded instruments, though.
I'd still prefer something like Open Transactions which supports blinded instruments, though.
All other currencies exist on Ripple in the form of balances. (Similar to how I store my money at Citibank in the form of USD balances. This is how our traditional financial system works).
The protocol needs a native currency (XRP) in order to pay the anti-DDOS fee. Every payment or trade requires the user to pay a 0.0001XRP fee which the protocol destroys.
It's purpose is to create a cost to sending "transaction SPAM" and make it extremely expensive to DDOS Ripple servers for any sustained period of time. This transaction fee is dynamic and scales higher in terms of heavy server load.
It's important that this type of fee be paid in a currency that is native to the protocol. This allows the protocol to remain neutral and global.
No, it doesn't. Have you seen the various pre-OpenCoin ripple protocols, or the currently competing colored coin proposals? None of them necessarily needed or would have benefited from a scarce-money fee currency. Ripple is a protocol for generating ad-hoc user-issued assets and arranging trade networks for exchanging these currencies. There's no reason fees can't be collected in whatever currency is being transacted, and then atomically converted into whatever currency the collecting node desires. That's what ripple is designed to do.
XRP also provides anti-DDOS, which is also something you'd also need to consider carefully in implementing my original designs, as well as a brilliant way to finance the creation, development, and maintenance of the network.
[1] http://freico.in/docs/freimarkets.pdf
> To me, the main thing XRP adds to the concept is a way of bootstrapping the network by providing a way to bridge the gap between islands of nodes with no trust pathway for monetary value to flow between them
XRP adds nothing new to the bridging problem. Any other common currency could have been used, such as USD-backed assets or bitcoin. XRP was Jeb McCaleb's stab at Bitcoin 2.0, and the bridging issue simply a post-facto rationalization. In a world where there is already existing decentralized currencies, or multiple legacy options for a common currency, there is no need for yet another centrally issued scarce-money... except that OpenCoin stands to materially benefit from forcing XRP down our throats.
> XRP also provides anti-DDOS...
It does so by economically limiting its own usefulness. Accounts and assets cost real money to create and maintain - more so than the fees involved with bitcoin. That brings us back to the traditional banking model of institutional asset issuers and heavyweight accounts, and rules out a number of protocols involving ephemeral asset issuance or privacy-enhancing one-time-use accounts.
I don't consider the problem solved if the "solution" involves restrictions that unnecessarily limit the capability of the system.
> as well as a brilliant way to finance the creation, development, and maintenance of the network.
On this I could not disagree more. XRP is an unnatural, ill-fit hack on top of Ripple which provides no tangible benefit that could not be achieved by other less restrictive, and less obviously self-serving means. It therefore ads risk to anyone investing time or resources into using Ripple, as it may be surpassed by a superior fork which removes XRP.
Financing the creation of a new, distributed, peer-to-peer network is not easy, I know - it's been hard trying to get funds for Freimarkets. But the OpenCoin / Mastercoin / Bitshares model is not the way to do it, in my opinion. Rather the bitcoin model is: distributed issuance and make your money from the economy that develops, not an underhanded wealth transfer written into the protocol.
One developer was paid, instead of stock a billion ripples. The first thing Opencoin/Ripplelabs did was giveaway very small amounts to create artificial scarcity and then open an exchange (through Bitstamp) to sell off as many as possible for Bitcoins. At the peak Ripples were worth more than all the Bitcoins in the world.
I remember Joel (I think) was adamant that Ripple was not a currency at all, except we ended getting him to admit it was meant to be a competing currency to Bitcoin.
I do not trust them at all, especially now Google are involved in backing them.
User-issued assets on ripple have a customizable transit fee which is effectively collected in the issued currency (since the fee is paid from the balance of the issue back to the issuer). For example, bitstamp's issuer fee is 0.2%, so any trades of bitstampBTC or bitstampUSD pay 0.2% of the amount back to bitstamp's issuer address. (the fee is set at creation of the issuing address and can't be changed later).
Bitcoin achieves BFT by using its native currency (bitcoins) in a proof-of-work scheme. Basically BFT means a malicious node can't do anything which will break the blockchain, because the only way any node can make changes to the blockchain is if it has solved a block (has the private keys to next block of bitcoins). Nodes with private keys to previous bitcoins have to get changes relayed through the node which solves the next block.
Likewise, Ripple achieves BFT by using its native currency (XRP) in a consensus scheme. The consensus scheme relies on Unique Node Lists (UNL), instead of proof-of-work. So nodes can only propose changes to the ripple ledger if they are on the UNL of some other node. And changes will only be accepted if they are signed by the private keys of the native currency (XRP). Nodes which aren't on any UNLs have to broadcast their changes to nodes which are on a UNL, and of course, must still have the private keys to make those changes.
There are probably other ways to provide BFT, but using a native crypto-currency is one of them.