190 karma · joined November 10, 2013
"As you know, our current ultimate redemption rate is 93%, a very high assumption for any consumer loyalty program."
[1] http://seekingalpha.com/article/931161-american-express-mana...
I'd suggest using a higher estimate for the value of rewards points. (You used a 1%.) You can explicitly get >1% cash back on many cards, so I'd argue that's really the lower bound.[1]
Most reward points can be redeemed for ~2%, with conscious consumers getting even more than that. [2]
Consumers are very aware of the value they're getting, too. If you read AMEX company filings, the redemption rate on MR points is >90%. I found that shockingly high. It's tough to get consumers to switch to bitcoin when it's worse value and more risk.
[1] https://creditcards.chase.com/freedom?jp_cmp=cc/freedom/off/... [2] http://boardingarea.com/onemileatatime/2012/05/25/my-updated...
I use my credit card all the time for 2 reasons: 1) fraud protection and 2) reward points.
Interchange fees paid by the merchant are essentially being passed to the consumer via reward points. Why would people switch from credit cards to bitcoin en masse?
Even at huge companies with resources dedicated towards IT infrastructure, systems still go down with regularity. Dropbox is probably still more reliable than what many large companies use.
"Because Ripple’s new architecture does not require mining [to reach consensus], the creators of Ripple faced a choice: exclusively distribute XRP via mining or diversify distribution methods to include useful mining, business development, funding third-party developers, and hiring talent at Ripple Labs, the company responsible for improving upon and promoting the Ripple protocol."
XRP is currently distributed via the "Computing for Good" program:
"We’re giving away XRP in exchange for donating computing power to scientific research via World Community Grid. Anyone with an Internet-connected computer or Android device can participate."
The primary purpose of mining is to allow Bitcoin nodes to reach consensus about the blockchain. It is intentionally resource intensive. It takes 8-10 minutes. And it is subject to a 51% attack.
I believe that the Ripple protocol's method for reaching consensus is superior to Bitcoin's. It is orders of magnitude faster (2-5 seconds vs. 8-10 minutes). It is not subject to the 51% attack. It is not computationally expensive or resource intensive. It seems like a better design to me.
Ripple protocol =! XRP. If you don't like XRP, then don't buy it. Easy solution. Ripple is still valuable as a protocol, since it's currency agnostic.
@Goldenkey - While we're making demands of each other, please take your logic-free and malinformed vitriol off HN.
His idea was to make this trust explicit. And that's the birth of Ripple. Ripple's consensus process is predicated on trust that other entities are not colluding against you.
The Ripple protocol is not subject to the 51% attack that Bitcoin is subject to. Making entries in the ledger has nothing to do with computational power.
-----
Link to the 2011 discussion that spawned Ripple: https://bitcointalk.org/index.php?topic=10193.msg146250#msg1...
EDIT: Adding a link explaining Ripple's consensus process for making changes to a shared ledger: https://ripple.com/wiki/Consensus
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.
The Ripple protocol destroys negligibly small amounts of XRP with each transaction as an "anti-transaction SPAM" measure. It's a negligible amount of money. This anti-SPAM fee currently equates to about $0.0000001 per transaction. If you hypothetically applied that fee to every single bitcoin transaction that has ever occurred, it would total a whopping $2.64. [1]
It's pretty misleading to suggest that fees are "effectively paid to" Ripple Labs (formerly Opencoin) as if it's some greedy scheme. It's actually quite an elegant design to protect the Ripple network from DDOS attacks.
Yes, this does very incrementally benefit ALL holders of XRP, since it has the effect of decreasing supply. And yes, Ripple Labs is the largest holder of XRP.
But no one is laughing their way to the bank collecting some sneaky fees....
[1] Source for bitcoin transaction volume data: https://blockchain.info/charts/n-transactions?timespan=all&s...