
Blockchain startup R3 sues competitor Ripple - petethomas
http://www.reuters.com/article/us-r3-ripple-lawsuit/blockchain-startup-r3-sues-competitor-ripple-idUSKCN1BJ27I
======
ringaroundthetx
R3 had an options contract to purchase 5 billion Ripples for $42,500,000 any
time until 2019

Ripple doesn't like that the same purchase would give Ripple Inc.
$1,000,000,000 at today's exchange rates

Ripple doesn't know how options contracts work. ha ha oh well.

I wonder if there is another side to the story. Otherwise, easy case!

~~~
s17n
But would it be possible to sell even $42,500,000 of Ripple right now?

~~~
olegkikin
Easily. That's less than the daily volume on just one exchange:

[https://coinmarketcap.com/currencies/ripple/#markets](https://coinmarketcap.com/currencies/ripple/#markets)

Of course, you won't get a good deal if you just try and dump $42M worth of
Ripple in one sale order. I'd spread it over a week over multiple exchanges.

But note that it will actually be a billion dollars worth of Ripple, which is
_much much_ harder to sell.

~~~
s17n
Right, I was thinking more along the lines of needing to raise the $42 mil to
exercise the option.

Anyway, I'm really curious about what the relationship between trading volumes
and how much money you can actually get is - it doesn't seem obvious to me.
Like, if I'm a trader trying to make short term gains trading a million
dollars a day, and I decide on a new strategy that involves doing 10 times
more trades, the volume just went up by $9,000,000/day but the underlying
demand for currency is still the same.

I posted an ask HN about this at
[https://news.ycombinator.com/item?id=15203974](https://news.ycombinator.com/item?id=15203974)

~~~
olegkikin
It depends which currency/ICO you're talking about. Trading $10M/day in
bitcoin world is not a big deal.

You can look at the market depth on various exchanges:

[http://bitcoinity.org/markets/bitstamp/USD](http://bitcoinity.org/markets/bitstamp/USD)

For instance, if you dump $10M worth of bitcoin on Bitstamp, the price will
shift by only $270, and that's ignoring the hidden limit orders. And the
market will react to it as well - cheaper coins create more demand.

~~~
s17n
I'm not totally sure what the chart means (and I did read the explanation),
but if I'm understanding you correctly, you're saying that Bitstamp has $10M
worth of buy orders for BTC at a price of at least $(current price - 270)?

~~~
modeless
Yes, that is what he means. You can see a combined order book for most of the
large exchanges here:

[http://data.bitcoinity.org/markets/books/USD](http://data.bitcoinity.org/markets/books/USD)

For example, by looking at this chart one can calculate that if one sold
10,000 Bitcoins right now with simultaneous market orders across all
exchanges, one would receive north of $40M and the price would drop to $4,000.

~~~
justjonathan
That's great in theory, but in practice that's not what happens, because new
orders influence existing orders, and cause additional new orders to be
created. Much smaller sales can in fact, and to do, cause much larger price
movements.

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dangero
There is actually a really interesting dynamic to this option contract. Ripple
Labs owns a large amount of Ripples. They own enough to tank the market price
and make this contract irrelevant. I'm sure they don't want to do that for
other reasons, but the existence of this options contract means they didn't
anticipate the price to go up this fast so now they are torn between a)forcing
the price down b)accepting this option contract and paying it c)trying to back
out of it

~~~
wmf
It's not clear that Ripple Labs is any worse off honoring the option now than
they were; in either case it's a fixed fraction of their holdings.

Edit: Let me explain this again. Let's say the option was exercised last year;
Ripple Labs would be out XRP that is now worth ~$1B. Now let's imagine that
the option is exercised right now; Ripple Labs would be out ~$1B of XRP. It's
the same thing.

~~~
zdkl
You're focusing on the wrong thing so let me explain again as well...

It's not about the beancounters realising the option is way bad for the
issuer, it's management getting cold feet about signing off on 5% and
mispricing future trades.

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Animats
What event made XRP increase by a factor of 50 since March 2017, after years
of going nowhere?

~~~
sillysaurus3
I'm a fan of "there is no rational explanation." The other answers seem
plausible, but my theory is that if a coin has any kind of value proposition
and doesn't completely fail, eventually some speculators will notice that it's
a solid investment. The calculus goes like this: When it's a bull market, if
you buy $X million of a coin that hasn't had much volume, everyone else will
simultaneously see that this coin is suddenly popular. That will trigger them
to buy, since it's going up.

Why doesn't it go back down? Well, once you've invested, there isn't much
reason to sell. Your investment went up by some N multiplier, and as long as
most people feel the same way, your multiplier is safe.

This explanation sounds too simplistic to be true, but whenever you look at
the chart, the data seems to suggest it's plausible:

[http://i.imgur.com/OU6me1N.png](http://i.imgur.com/OU6me1N.png)

Notice the volume was completely flatlined up until a huge purchase in March
2017. That massive purchase kickstarted that 50x factor.

These dynamics are independent of any particular coin. So yes, it's true that
CoinDuJour might offer some benefits and unique features. But that value
proposition is secondary to the overall investment dynamics at play here. It
almost doesn't matter what the coin does. As long as it does something
different and it's stable, it becomes an attractive target for speculation.

There are a massive number of people with spare ETH and BTC to throw around.
They all want to park it somewhere that earns them money. See Pinkapp for a
strange phenomenon:

[https://news.ycombinator.com/item?id=15153586](https://news.ycombinator.com/item?id=15153586)

[https://news.ycombinator.com/item?id=15151292](https://news.ycombinator.com/item?id=15151292)

After they posted that comment, I've been lurking their slack channel. A bunch
of people have come in trying to invest in them. So if even pinkapp can
generate a >$1M "series A" when it's straight-up illegal, it's clear there's a
lot of investment energy floating around.

~~~
Anderkent
> When it's a bull market, if you buy $X million of a coin that hasn't had
> much volume, everyone else will simultaneously see that this coin is
> suddenly popular. That will trigger them to buy, since it's going up. Why
> doesn't it go back down? Well, once you've invested, there isn't much reason
> to sell. Your investment went up by some N multiplier, and as long as most
> people feel the same way, your multiplier is safe.

That's basically definition of a bubble. 'as long as most people feel the same
way, your multiplier is safe'? So basically your multiplier might go away at
any point.

~~~
zdkl
> So basically your multiplier might go away at any point.

Hedging, hedging, hedging. There are enough derivatives in the coin world to
have a pretty decent portfolio growth, if you're willing to manage it and deal
with the tx/transfer fees

~~~
clappski
But if there is a bubble, hedging coins against each other is probably the
worst thing you can do, right?

~~~
zdkl
If you've cashed out your initial investment plus a healthy return, anything
left in that portfolio is gravy though, right?

------
joosters
Since Ripple control their coin, they could effectively do a stock split...
change the code to give all current ripple holders 1,000,000 coins for each
one that they own now.

R3 would still have their option, it would just suddenly be worth much less
thanks to the forced inflation :)

~~~
seanhunter
Options don't work that way fortunately/unfortunately. In the event of a split
in the underlying, you have to split the options also.

~~~
qeternity
This isn't an inherent property of options. It's just how almost all options
contracts are written otherwise they wouldn't hold any value. If this option
isn't written that way, then it's feasible.

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fiatjaf
Why did they gave that R3 that option? Why? Is that true?

~~~
tylersmith
The article makes it sound like in exchange R3 was supposed to give them
connections. Paying for things with centrally printed money sounds like a
cheap way to get what you need.

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wpietri
Is there any underlying value to anything here? Or is this just penny-stock
froth made shiny and new by adding "blockchain" to it?

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contingencies
Damn. I could swear have 100s of 1000s of XRP in an old wallet somewhere... at
$0.20/XRP that's some actual money.

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mohdasim
woww, ripple had tied up multiple bank like SBI etc.

~~~
mgberlin
For anyone that hasn't been following them over the last year or so, they've
made amazing inroads into the banking industry.

~~~
StavrosK
What do they do in that industry exactly? I never really got the purpose.

~~~
tylersmith
Provide a system for inter-bank transfers. Like SWIFT with (theoretically)
lower costs and latencies.

~~~
StavrosK
Ah, thanks. That's actually a very interesting application for a blockchain,
providing settlement services between banks on it.

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f00_
wonder if they've already gone through arbitration [https://ripple.com/terms-
of-use/](https://ripple.com/terms-of-use/)

~~~
objclxt
They have a separate contract, I don't know why you think it would be bound by
their terms of use. Contracts nearly always contain language about how
disputes will be resolves, and the venue they will be resolved in.

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visarga
Lateral inhibition /s

