
Rise of Bitcoin Competitor Ripple Creates Wealth to Rival Zuckerberg - miobrien
https://www.nytimes.com/2018/01/04/technology/bitcoin-ripple.html?module=WatchingPortal&region=c-column-middle-span-region&pgType=Homepage&action=click&mediaId=thumb_square&state=standard&contentPlacement=5&version=internal&contentCollection=www.nytimes.com&contentId=https%3A%2F%2Fwww.nytimes.com%2F2018%2F01%2F04%2Ftechnology%2Fbitcoin-ripple.html&eventName=Watching-article-click
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pmontra
I just read a critical analysis about Ripple [1] then saw this thread on HN. I
quote the conclusion

"XRP is 100% premined, Ripple holds 60% of the supply, controls which nodes
are selected as “trustworthy” to confirm transactions, while they have paid
nothing to create those tokens that people are so willingly buying at $4+ per
piece and thereby make the creators insanely rich. Let us call it what it
really is, digital fiat, the renewed version of the debt-based traditional
fiat system, leveraged by latest technology – which eventually has nothing to
do with cryptocurrency whatsoever."

[1] [https://cryptoyoda1338.wordpress.com/2018/01/04/the-truth-
ab...](https://cryptoyoda1338.wordpress.com/2018/01/04/the-truth-about-
ripple/)

~~~
Cthulhu_
I should make my own cryptocurrency, generate $60 billion out of thin air.

~~~
jbob2000
You don't even need to go that far, just generate a bunch of UUIDs and sell
them to people.

~~~
panarky
When you can explain why people trade hard-earned cash for cryptocurrency but
would never buy your UUIDs, then you'll understand the flaw in your argument.

Hint: It's not because they're stupid or deceived. Go deeper.

~~~
jbob2000
Follow me on this one. If I hold all my currency in a service like Coinbase,
how do I know that I actually bought bitcoins? All I see is a pretty interface
that says "you have x bitcoins" and maybe a list of hashes and whatnot.

To a non-technical, these hashes and numbers are totally meaningless. As long
as everything is done through my service (coinbase, for example) nobody has
any idea if there are actually bitcoins behind these numbers or not. You can't
hold a bitcoin, I can't ask you to mail me them so I can verify that they
exist. The only thing you can do is trust the blockchain, which you definitely
need a technical background to understand.

So yes, with enough smoke and mirrors, I believe you could setup a service to
sell people UUIDs. It hinges on non-technicals using only my service though.
Obviously you couldn't do this with a real cryptocurrency, because the
blockchain would tell you if the coins actually exist or not.

~~~
pmontra
I might be wrong, but if you keep your coins on an exchange they are in a
wallet of the exchange, with a private key of the exchange. They are linked to
your account but that information is not stored in the blockchain. It's in the
contract between you and the exchange. Very similar to fiat money in a bank
computer. To own your bitcoina they must be in your computer. Make backups,
trust your hardware. I suggest a pre 2013 Atom :-)

------
tristanj
A couple other discussions from earlier this week.

[https://news.ycombinator.com/item?id=16071731](https://news.ycombinator.com/item?id=16071731)
(Yesterday)

[https://news.ycombinator.com/item?id=16057883](https://news.ycombinator.com/item?id=16057883)
(Two days ago)

I found the top comment in yesterday's thread rather interesting. If there is
a hard cap of 100 billion Ripple coins that can exist, and Ripple Labs already
owns 60% of them, at today's price of $3.33 that would mean Ripple Labs has
$3.33 * 0.60 * 100billion = $200 Billion in assets, making it one of the
largest companies in the world. It's complete madness.

~~~
skydv
but they can't sell any of it without annihilating the market. It's like I
sell a diamond to my friend for 1 billion dollars, but she pays me 1$ every
year for a billion years. So formally I am a billionaire, but actually I am
one diamond short.

~~~
bmking
It depends. Surely they could not instantly dump all of their "ripple assets"
and expect the market to absorb it. But currently the 24-hours trading volume
is 6.6 billion USD ([https://www.livecoinwatch.com/price/Ripple-
XRP](https://www.livecoinwatch.com/price/Ripple-XRP)). A huge part of that may
be wash trading due to some zero-fee exchangers. Nevertheless I am speachless
how relatively speaking a lot of money is actually being poured into this
right now.

~~~
shepardrtc
> Surely they could not instantly dump all of their "ripple assets"

They can't. They've escrowed that 60 billion away and will release it to
institutions at regular intervals. Any XRP that isn't bought will be put back
in escrow. The executives that have large amounts of XRP themselves are
contractually obligated to not dump it. They can only sell a certain amount
per week. I think its like 10,000 or something (but I could be wrong on that).

------
Ataraxy
Whenever I see extremely disproportionate volume coming from Bitthumb I'm
immediately skeptical it's anything more than a pump and dump cycle. Same
thing happened with BCH among others.

~~~
varren
yeah bithumb is insane. I'm scared to assume how much money involved and why
nobody is trying to/cant arbitrage this. It's like complete noncence at this
point. Whole different price universe. And i can't belive that it is some
random korean dude that can't register on bitfinex or some other exchange and
buy the coin he wants with 30-60% discount.

------
bekman
If this’s not a bubble I don’t know what it’s

~~~
wsc981
Since everybody and their grandmother is telling these days it's a bubble,
I've somehow come to the believe that this time it's not a bubble. Why?

Well, during the mortgage crisis, very few economists would actually claim it
was a bubble. Perhaps it was 5% - 10%. At least this was what appeared in the
news. The big shots at the central banks didn't see this bubble either, for
the most part. But now every big banker is saying Bitcoin is a bubble.

For the dot-com bubble it was much the same. The majority of people
(economists, bankers and the like) that should recognise a bubble were only
able to call it a bubble in hindsight.

The more I hear this is a bubble, the more of my spare money I will invest
into cryptos.

~~~
dragonwriter
> Well, during the mortgage crisis, very few economists would actually claim
> it was a bubble.

During the mortgage crisis, basically every notable economist and economic
commentator was calling it a bubble; some had been for several years, and some
only very late (but still before it popped), but it absolutely is not the case
that the concept was rare my stated.

The closest your statement is to truth is that there weren't lots of people
accurately predicting the timing of the bubble popping, but that's a different
thing than recognizing the bubble.

> For the dot-com bubble it was much the same.

It's true that he dot-com bubble was much the same as the mortgage bubble, but
only in that it equally did not match your “no one was calling it a bubble”
description.

------
teekert
Yeah, he's pretty rich... if he cashes all his Ripple at the price point of
the current highest bidder. However, said bidder will not want all of it, so
some will go at a lower price, and so on. Eventually the price may become
extremely low due to the very high supply (which diminishes demand again). I
wonder if this is taken into account. All crypto starters are rich in their
own coins but they can never cash it in, at least not all at once.

Same holds true for "normal" money since the gold standard was left behind of
course.

Their wealth depends on someone willing to pay a price, she or he is willing
to pay said price because she or he expects the next person to pay even more
at some point. Classic pyramid. Bad? I don't think so. Heading for an eventual
crash? I think it will, at some point. Hopefully I'll get rich before then.

What Ripple has going for it is that they may actually succeed at making it a
system banks will adopt. If futures become available, insuring parties against
fluctuations during transfer, Ripple may have actual value over just the next
girl/guy wanting it more than you.

~~~
bemmu
Wanna be billionaire buddies? Issue 1 billion teekertcoins, I'll buy one from
you for $1 if you do the same.

~~~
teekert
Sounds good, Three Commas Club here we come! (Let me first start with a course
on constructing Blockchains though... or who cares, lets just use an Excel
file for bookkeeping!)

~~~
cwkoss
Gotta use Google Sheets or it won't be decentralized /s

------
iamleppert
The thesis statement here is value itself is an arbitrary concept and is such
because we say it is. It's completely imaginary, often times irrational and a
shared fiction. The fact that we have conventional billionaires at all is
almost a ridiculous concept in and of itself, as any amount of tangible work
is always done en masse, not by a singular person. Works can be created by
individual contributors but it is the mass that gives them value. Put those
people on an island and those works become meaningless.

In the case of cryptocurrency, the work here is being done, again, by many
people. Economics is, as a fundamental matter, the study of choice. People
are, for whatever reason, choosing to do both work and ascribe value to these
systems, and it just so happens that these systems are designed in such a way
to funnel that work into the hands of mostly a few. This is not owing to any
revelation or discovery or intellectual pursuit, but represents pure greed and
capitalism --- the selfish pursuit of benefit from fellow man.

Whoever says bitcoin and the other currencies are some kind of panacea that
will free us from the shackles of government fiat, big corporations and
stymied control of wealth need only look to stories like these, which, are
proof that this is just a different and new kind of master.

~~~
pixie_
Which one of these properties of cryptocurrency is imaginary?

    
    
      Coins cant be faked or duplicated
      No one can create them at will
      They can be transmitted quickly/globally with low fees (excluding bitcoin of course) 
      You can store them yourself, no bank needed
      Sending huge sums of money is no problem
      Relatively simple design, 8 page white paper
      Has worked as designed for almost a decade
    

Seems like crypto has a lot unique intrinsic value that surpasses traditional
currencies to date.

The only thing imaginary is your imagination. Crypto is very real. Even people
on an island would eventually find a common denominator in which to store
value which has many of the same properties above.

~~~
tromp
> No one can create them at will

Didn't Ripple Labs create 100 bilion ripple at will?

~~~
shams93
Yeah ripple is a token not a currency they can generate new ripple at will but
since the founder has a large stake he has an incentive to not flood the
market. But ripple is not the future it's a stopgap running on centralized
servers it's not revolutionary like etherium

~~~
xorcist
Because the Ethereum people only created 80 million tokens out of thin air?

------
jasonwilk
I'm curious if the venture investors in Ripple (seed, Series A, b, etc)
benefit at all from the uptick in XRP. I assume an equity investment did not
take the form of coins when those deals were done. Hopefully for those VCs I'm
wrong. Anyone have an idea?

------
noncoml
We had three stories about Ripple appearing in front page in 3 days. What’s
going on?

~~~
Kiro
Just read the headline of this article and you'll realize why the current
Ripple psychosis is newsworthy. What has happened the last week is historical
and scary.

~~~
adventured
It's the signal the mania stage is nearing an end.

See: Yasumitsu Shigeta

They're playing musical chairs right before the implosion. Ripple might be
worth a couple billion dollars as a dangerous speculation. PayPal, an actual,
real, live, huge, global, payment & money transfer system, is worth $92
billion.

Some people say you can't place a value on something like Ripple. Sure you
can, treat it as an actual business, measure its prospects over the next 3, 5,
10 years. What are those business prospects for the next few years? Not much,
less than that of Square and Stripe.

Ripple is just this bubble's CMGI or Internet Capital Group. Bitcoin is this
bubble's Cisco or AOL (if it's lucky). The junk ICOs are DrKoop.com or
TheGlobe. There's nothing unique about what's going on, history is rhyming as
it so often does. It's a likely indication the global liquidity asset bubble
party - spurred on by so many central banks pumping crazy levels of liquidity
into the global economy for a decade - is reaching toward a climax, again.

~~~
tedeh
Can you explain the Yasumitsu Shigeta reference? I tried Googling but I don't
get it.

~~~
stock_toaster
From what I gather, the founder and chairman of Hikari Tsushin Inc. Once among
the world's richest people, until Hikari Tsushin lost 99% of its stock value
in 2000.

EDIT: found this[1]

[1]:
[https://www.theguardian.com/technology/2000/nov/25/internetn...](https://www.theguardian.com/technology/2000/nov/25/internetnews.business)

------
keymone
Ripple is not Bitcoin competitor because Ripple is not a cryptocurrency.

------
ringaroundthetx
This is no different from billionaires that hold massive equity stakes in
their own companies, including Zuckerberg.

> Yet the fortunes of Mr. McCaleb and Mr. Larsen are not nearly as durable as
> those of other people on the Forbes list given that the value of virtual
> currencies fluctuates wildly. If Mr. Larsen wanted to access his wealth by
> selling Ripple tokens for dollars, it would likely drive down the value of
> Ripple tokens — and his riches.

People keep trying to apply a different higher standard to cryptocurrency in
order to prove why it cant function as legacy asset classes.

Honestly, I think its because people dont know how the
equity/currency/commodity markets work and are synthesizing standards while
watching crypto billionaires get minted on the fly to justify their missed
opportunities.

In Ripple’s case, the founders are probably more liquid than other equity
billionaires. Ripple traded 7 billion usd today, Facebook only 2 billion.

And I dont even like Ripple, but right now I have to fight ignorance outside
of the crypto arena.

~~~
Brede
The difference is very simple.

If you buy all ripple tokens in existence, they are useless. If you buy all
facebook stocks in existence, you own facebook.

~~~
ringaroundthetx
All ripple accounts require 20 xrp which cannot be moved so this is an
impossibility to begin with

Xrp holders have some function in the network, I forgot

And you could name the price for anyone else that wanted xrp or to use the
network

Although I would say Ripple’s XRP is not the settlement solution Id be looking
for, I wouldnt say owning 99.999% of them makes it worthless

Owning all of a commodity doesnt make it worthless, even when that commodity
is a unique collection of cryptographic signatures

~~~
keymone
if i have 20 ripple but can't spend them - how is that different from having 0
ripple?

~~~
imtringued
You gave someone else $40 for free.

~~~
keymone
right, i gave them to "open my account", now i have 20XRP that i can't spend -
how is it different from having 0XRP that i can't spend?

------
waytogo
Looked into both Ripple (XRP) and Stellar (XLM) and invested more into Stellar
because of...

\- the much better scaling than traditional coins (semi-central structure)

\- the track record of the founder Jed

\- the fuller feature set including the creation of new tokens like ETH but
easier

\- the recent announcement like IBMs partnering and stress tests, Kin moving
to Stellar, Signal's founder creating his coin on Stellar

\- Stellar's lower market cap, so there's still room above

I think Ripple is also good but has a different focus and since the original
founder of Ripple left to Stellar, I am a bit more into Stellar.

~~~
sethgecko
I looked into the top15 currencies by market cap. I decided to stay away from
cardano/tron/iota/bitcoin cash/dash/neo. Stellar is my favourite so far other
than bitcoin even though I don't 100% understand the consensus algorithm yet.

~~~
lawn
Why do you lump bitcoin cash with the other pointless coins? It is better at
being bitcoin than bitcoin except for speculative purposes (so far).

~~~
sethgecko
Because I don't find anything that does better than litecoin. Also this video
[https://www.youtube.com/watch?v=JarEszFY1WY](https://www.youtube.com/watch?v=JarEszFY1WY)
shows the fundamentally different viewpoints between bitcoin and bitcoin cash.
As someone mentions in the video what bitcoin cash is trying to do is
implement business logic inside the protocol which is a layer violation.

~~~
lawn
Litecoin is basically following Bitcoin's approach to scaling which will leave
it congested if it gets popular enough. Litecoin already has much higher fees
than Bitcoin Cash. Litecoin's development has basically been nonexistent since
it's invention and has only been copying Bitcoin ever since. Bitcoin Cash is
also quickly gaining merchant adoption with for example BitPay, something
Litecoin has failed to do in many years. The network effect is a powerful
thing.

That Bitcoin Cash would implement "business logic" is just wrong. It simply
removes the artificial blocksize limit and does not try to prevent users from
utilizing 0-conf if they so choose. From that point it is Bitcoin which is
forcing out valid use cases (low value transactions, opt in 0-conf).

~~~
sethgecko
Bitcoin cash's approach to scaling is just not sustainable and leads to
centralization. You cant just increase the block size each time the mempool
fills. In a couple of years no one would be capable to run a full node on
consumer hardware. Also you open up all kinds of different ways for the
network to be attacked. With a 1MB block size an attack block will take 40
seconds to validate with a 2MB size it will take 14 minutes. The correct
solution to scaling is a Layer 2 protocol.

Bitcoin Cash's mantra is that they want people to treat 0-confirmation
transactions as safe which is absolutely the opposite of what the whole
protocol is about. Check this infographic that was tweeted a few hours ago
[https://twitter.com/Bitcoin/status/949019786704547842](https://twitter.com/Bitcoin/status/949019786704547842)

~~~
lawn
This black and white thinking is just not practical. "Since very large
increases will disallow nodes on consumer hardware we will block any increase"
is just poor engineering.

The approach of Bitcoin Cash is to allow the increase when possible. 8MB is
for example perfectly doable today on consumer hardware. Investigations are
ongoing for how large the blocks can become and improvmenets are being made on
for example propagation time and allowing faster startup of nodes.

For example 1GB have been propagated and validated in a timely manner by
consumer hardware existing today. (Not saying we should bump it up right now,
but the capabilities are here).

> With a 1MB block size an attack block will take 40 seconds to validate with
> a 2MB size it will take 14 minutes.

That's just wrong.

Edit: Because Bitcoin Cash eliminates the quadratic hashing problem.

> Bitcoin Cash's mantra is that they want people to treat 0-confirmation
> transactions as safe which is absolutely the opposite of what the whole
> protocol is about.

No it's not. There are different degrees of safe which Bitcoin totally fails
to acknowledge. Buying a coffee with 0-conf and a basic double spend heuristic
is perfectly fine and has been done on Bitcoin until full blocks (and RBF)
killed it, for example by shapeshift. xmr.to which converts Monero to Bitcoin
is also accepting 0-conf for smaller amounts.

Here again the extremist black and white thinking is bad.

> The correct solution to scaling is a Layer 2 protocol.

No, the correct solution combines on-chain and off-chain scaling.

