Yeah; people don’t realize how Bitcoin can do so much. It’s not (just) sending some irreversible transactions around, as useful as it is to replace Paypal/WU.
On a related note do you have any thoughts on ripple? It seems to offer huge potential convenience if ‘distributed payment processing’, which could work well to enable bitcoin to be easily spent and traded. From what I can tell their business model is based on making an essentially free, incredibly convenient service and if it takes off it will produce value in their own currency of which they will (allegedly) be distributing 80% for free. I don’t precisely understand how it magically operates as a distributed currency exchange and payment processor but it seems plausible (if enough people want it).
Reading about it right now, I would analogize it to an automated barter system, the hawala money transmission system, pre-modern banking’s system of drafts and correspondents like the Medici Bank, and Szabo’s bitgold minting.
If I’m understanding the wiki documentation right, you can basically think of Ripple as a Bitcoin in which everyone can issue as many bitcoins as they want but each user produces a different kind of bitcoin. The only reason anyone is willing to hold a wedrifid-coin is because they know you in real life and expect you to pay up, or the reason someone is willing to hold gwern-coins is because I have in the past upheld my agreements to, say, order something off Amazon.com for them. I might decide to accept wedrifid-coins and now the wedrifid-coin holders have the option to either shake you down in real life or buy something off Amazon via me; and if someone else decided to accept gwern-coins, a holder of wedrifid-coins could convert to gwern-coins and then convert to someoneelse-coins.… Automated barter of personal IOUs, almost—like those circles you hear of involving scores of people in which A gives something to B, B gives something to C, and so on to Z who gives A what A really wanted (most famously used in kidney transplants; I need a transplant, but my brother is not compatible with me, so he gives his kidney to B, and B’s son gives a kidney to C, and C’s father gives me a compatible kidney).
Since you’re deciding whose coins to accept directly or transitively, Ripple seems to pass the security buck to your decision there. This obviously makes Ripple’s job much much easier. Since you’ll be deciding basically on social or extra-network factors, Ripple also doesn’t bother with any worries about anonymity. (Their list of features re mining, if I’m understanding the architecture right, less than impressive in this light.)
There’s also a centralized aspect which is nasty and probably part of how they plan to monetize it.
So yeah, interesting. I don’t feel compelled to trade in my one bitcoin for any Ripple stuff, though.
I don’t precisely understand how it magically operates as a distributed currency exchange and payment processor but it seems plausible (if enough people want it).
I think it operates pretty much the same way a PGP web of trust operates. You specify a few public keys who you trust, and you can bootstrap from there.
If I’m understanding the wiki documentation right, you can basically think of Ripple as a Bitcoin in which everyone can issue as many bitcoins as they want but each user produces a different kind of bitcoin.
So (I assume) the way it can operate as a distributed currency exchange is if there is someone with Yen out there and someone with USD out there and either Yen-guy or USD-guy trust each other directly or their is a web of trust between them. So RandomJoe can sell Yen-guy coins for stuff and buy USD-coins then USD guy will give actual cash to him.
Yes, I think that’s how it could go down. Or Yen-guy and USD-guy could exchange currency directly, or they could do it hawala-style indirectly (for example: Yen-guy could hand out yen to anyone wandering into his Tokyo shop with USD-guy coins, and then USD-guy, to settle his bills with Yen-guy, can fly in and visit Yen-guy with a case of wine which Yen-guy can drink or sell).
On a related note do you have any thoughts on ripple? It seems to offer huge potential convenience if ‘distributed payment processing’, which could work well to enable bitcoin to be easily spent and traded. From what I can tell their business model is based on making an essentially free, incredibly convenient service and if it takes off it will produce value in their own currency of which they will (allegedly) be distributing 80% for free. I don’t precisely understand how it magically operates as a distributed currency exchange and payment processor but it seems plausible (if enough people want it).
Reading about it right now, I would analogize it to an automated barter system, the hawala money transmission system, pre-modern banking’s system of drafts and correspondents like the Medici Bank, and Szabo’s bitgold minting.
If I’m understanding the wiki documentation right, you can basically think of Ripple as a Bitcoin in which everyone can issue as many bitcoins as they want but each user produces a different kind of bitcoin. The only reason anyone is willing to hold a wedrifid-coin is because they know you in real life and expect you to pay up, or the reason someone is willing to hold gwern-coins is because I have in the past upheld my agreements to, say, order something off Amazon.com for them. I might decide to accept wedrifid-coins and now the wedrifid-coin holders have the option to either shake you down in real life or buy something off Amazon via me; and if someone else decided to accept gwern-coins, a holder of wedrifid-coins could convert to gwern-coins and then convert to someoneelse-coins.… Automated barter of personal IOUs, almost—like those circles you hear of involving scores of people in which A gives something to B, B gives something to C, and so on to Z who gives A what A really wanted (most famously used in kidney transplants; I need a transplant, but my brother is not compatible with me, so he gives his kidney to B, and B’s son gives a kidney to C, and C’s father gives me a compatible kidney).
Since you’re deciding whose coins to accept directly or transitively, Ripple seems to pass the security buck to your decision there. This obviously makes Ripple’s job much much easier. Since you’ll be deciding basically on social or extra-network factors, Ripple also doesn’t bother with any worries about anonymity. (Their list of features re mining, if I’m understanding the architecture right, less than impressive in this light.)
There’s also a centralized aspect which is nasty and probably part of how they plan to monetize it.
So yeah, interesting. I don’t feel compelled to trade in my one bitcoin for any Ripple stuff, though.
I think it operates pretty much the same way a PGP web of trust operates. You specify a few public keys who you trust, and you can bootstrap from there.
So (I assume) the way it can operate as a distributed currency exchange is if there is someone with Yen out there and someone with USD out there and either Yen-guy or USD-guy trust each other directly or their is a web of trust between them. So RandomJoe can sell Yen-guy coins for stuff and buy USD-coins then USD guy will give actual cash to him.
Yes, I think that’s how it could go down. Or Yen-guy and USD-guy could exchange currency directly, or they could do it hawala-style indirectly (for example: Yen-guy could hand out yen to anyone wandering into his Tokyo shop with USD-guy coins, and then USD-guy, to settle his bills with Yen-guy, can fly in and visit Yen-guy with a case of wine which Yen-guy can drink or sell).