Bitcoin and Ripple (reprise)

[Daniel]

There's been some earlier discussion of Bitcoin and Ripple (e.g. within
https://groups.google.com/group/rippleusers/browse_frm/thread/f7146f98f43e49b6/1678eb10b8137b24
and
https://groups.google.com/group/rippleusers/browse_frm/thread/d46b10cc6bfd635e/8c2e1160c358fbbf).

Here's my current (and perhaps incorrect) take on it, corrections welcome:

Bitcoin lets you pay for the tool to create good artificial scarcity,
and for good artificial scarcity. This is useful for making direct
payments to anyone (i.e. tracking who's done what). Good artificial
scarcity could eventually be replaced by other forms of value such as
useful computation, or energy. Ripple interpersonal financing could
complement and be complemented by bitcoin.

Thoughts?

[Daniel]

I think bitcoin would be a useful currency to include in the current
Ripplepay site. The name would of course be easy to add, and exchange
rates could theoretically be updated from a source like Mt Gox
(https://mtgox.com/). I would be willing to chip in to help cover this.

[Romualdo Grillo]

I agree with your proposal.

[Daniel]

I presented the basics of Ripple including an overview of possible use
cases to the bitcoin community:

http://www.bitcoin.org/smf/index.php?topic=1923.0

All feedback and participation welcome!

[Daniel]

Some feedback:

This seems interesting, I did not know that. But hey! I'm missing "Bitcoin" as Default unit on ripplepay! :-) Are you somehow related to ripplepay developers? It would be nice to add Bitcoin as currency ;-).

http://www.bitcoin.org/smf/index.php?topic=1923.msg24188#msg24188

I don't think that mutual credit systems stand a chance in the online arena.

http://www.bitcoin.org/smf/index.php?topic=1923.msg24191#msg24191
(led to further discussion)

The problems the bitcoin community has been having trying to exchange bitcoin for other currencies makes me think of this question -

What if the internet had its own bank ? Why are all these central bankers controlling everything when banking could be as decentralized and open source as bitcoin?

Imagine taking this idea to kickstarter for example and crowdfunding the worlds first open source bank which anyone could buy a share of. Those shares could be bought with bitcoin 

The entire internet would be monitoring the banks processes and procedures so greed and excessive fees charged by normal banks would be discouraged by massive attention. Loans could be decided the same way Kiva does them with person to person loans - why should the bank decide who to lend your deposited funds too without any choice?  The internet has the most eyeballs .

One of the banks here made $4 billion profit last year on the back of huge fees and charges while providing less and less service.


Does anyone think this idea has legs?

http://www.bitcoin.org/smf/index.php?topic=1937.msg24372#msg24372

An open bank is a fabulous idea, but banking is so heavily regulated that I can't see how it could be done. I'd love to be proven wrong though.

http://www.bitcoin.org/smf/index.php?topic=1937.msg24379#msg24379

+1 for p2p lending with Ripple.

http://www.bitcoin.org/smf/index.php?topic=1937.msg24490#msg24490

[Daniel]

Some market data (http://bitcoinwatch.com/):

Economy

Total size	4.69 million BTC or 1310056 USD or 23473500 RUB or 1010 ounces of gold
Transactions last 24h	3632
Transactions avg. per hour	151.33
Bitcoins sent last 24h	99438.96 BTC
Bitcoins sent avg. per hour	4143.29 BTC

Exchanges

Market	Bid	Ask	Last	Volume
mtgoxPaypal USD	0.2761	0.2835	0.2761	13901.2519999996
bitcoinmarket Paypal USD	0.2816	0.2815	0.2820	500
bitcoinmarket LibertyReserve USD	0.2600	0.2829	0.2500	0
bitcoinmarket Pecunix GAU	0.006100	0.006200	0.006100	0
btcexRussian RUB	6.0000	None	5.0000	0

Currencies

1 US dollar is worth 3.58 BTC.

1 Russian ruble is worth 0.20 BTC.

1 gram of gold is worth 163.93 BTC.

[Daniel]

Some more feedback (by e-mail, with permission):

I've read some about it, it seems actually rather interesting.

I'll also sign up for ripplepay and see how it plays out. :)

So I've been wondering, is it possible on ripplepay to get some kind of
visualization of the bit of network around you? Even a simple table such
as trust.bitcoin-otc.com shows would be nice. That way you can see just
how well connected your potential counterparty is, etc... Currently it
seems that you only see your immediate connections.

As far as I'm concerned, the visualization doesn't even have to be very
fancy. As long as raw data is available in something like json,
third-party services can provide any interface.

On 11/25/2010 10:42 PM, Daniel wrote:

[Sepp]

Bitcoin is an interesting way of establishing good artificial
scarcity, as Dan says.

I see one problem though in the long term.

The bitcoin scarcity cannot be adapted to the number of people using
bitcoin for payments. It is true that the number of available bitcoins
will gradually increase for some time, but when the full complement of
allowable coins has been used, there is no way to manage the
availability of coins, i.e. further coins cannot be issued. Quoting
from their site:

"The total eventual circulation will be 21 million bitcoins. There
will never be more coins than that."

This means that, assuming bitcoin wants to be more than a temporary
experiment, after the limit for creation of coins has been reached,
the value of each coin will increase as a function of how much demand
there is (how many people wish to use bitcoin as a means of payment).

The limit of 21 million bitcoins as the maximum to be created sets
that currency up to be an unstable means of payment. The value of each
coin will steadily increase (assuming that more and more people would
like to use bitcoins). As the increased demand cannot be satisfied by
creating more coins, they will become more and more valuable,
something which will wreak havoc with prices expressed in bitcoins.

I tried to bring this to the attention of the bitcoin creator, but
evidently I wasn't able to convince him that this would in time be a
problem...

Sepp

[Daniel]

http://www.bitcoin.org/faq#How_divisible_are_Bitcoins

How divisible are Bitcoins?

Technically, a Bitcoin can be divided down to 8 decimals, so 0.00000001 BTC is the smallest possible amount. For convenience, the program currently accepts only 2 decimal places.

[Miles Thompson]

In my opinion scarcity and divisibility is a necessary but far from sufficient conditions for a currency. Bitcoin, if it succeeds would be like gold, and have all the corresponding problems of a currency of that type (cornering the market, privileged control etc) but even that seems unlikely to me, since gold has (had) a whole lot more going for it than bitcoin - including being a form of currency which we were genetically evolved to desire - and since hacking the human genome is currently off the table for bitcoin (for now) I dont see it likely to succeed.

But my apologies. Wrong list.

Miles