Hi - employee of Ripple Labs here. Ripple is a backend payment protocol for financial instutitions. Using Ripple does not exempt the FI from the licenses and regulations that are required in its jurisdiction. Nor is Ripple intended to circumvent any regulations.
Financial institutions that integrate continue to do KYC (know your customer) and AML (anti-money laundering) screening, as they always have been required to do. If money transmission is involved, they must have a license to do that.
The goal of Ripple is to provide realtime settlement, for virtually zero cost, with competitive foreign exchange pricing. The existing system is antiquated, slow, and expensive... built on pre-internet architecture.
Investors like Google Ventures, Andreesen Horowitz, and other prominent VCs have invested in Ripple Labs. You are correct that Ripple Labs relies on holding XRP as an asset to fund some business operations (and maybe/hopefully make a profit).
Ripple Labs does *not* collect any transaction fees, as you state. Nor does it limit anyone's access to the network in any way whatsoever. The Ripple network is open source, neutral, and free for anyone to use.
@Simon7382 I beieve it took about 4 business days, which does come close to a week. Bank fees range from $15 to $40 for the recipients and a similar fee for the sender, whereas PayPal imposes a fee that rises in proportion to the amount. In contrast, Ripple is designed to clear transactions in just seconds without imposing such fees. For businesses that regularly have to pay or receive payments from people in other countries the savings and cash flow benefits could really add up..
Svereal business days? You are lucky. In my experience it takes about a week. Even if the money is wired (for a fee abouit $30, no matter of the wired amount) it takes 2-3 days to clear instead of what it should take, which is 2 minutes or less. As I said, the financial institutions have been ripping us off because they can.
@Simon7382 As I said, one of my acquaintances has used it and is quite happy with it. I don't have any first-hand experience myself. However, I have had first-hand experiences attempting to get paid by a business located overseas. No matter whether they use PayPal or a bank (I've tried it both ways) the fees are substantial and collected both from payers and payees for foreign currency. On top of that wire transfer fee, or PayPal fee, additional time of up to 3 business days is tacked onto regular clearing time for the funds to actually appear in the account.
This thing is somewhat better than Bitcoin but I would still not trust it with my money. However, its appearance may force the banks to finally stop ripping off their clients with totally unjustified super high transaction fees and also may force them to complete the transactions in minutes instead of sitting on our money for a week collecting short term interest on it (which belongs NOT to the banks but to us the customers).
Akll you do is post a bunch of nonsense and buzzwords. Ripple is not a "decentralized concensus." Ripple is collecting a transaction fee by issuing the currency, distriobuting it, and "destroying" Ripples with each transaction. OpenCoin readily admit the point of Ripple currency is to fund their company and it is well known that it was developed in order to try to avoid money transmiotter regs. Destroying Ripples is a transactiopn fee and it is a metter of time before the Ripple platform is regulated as money transmitters because that is what they are. They are facilitating transactions and charging a fee like every ofther currency exchanger. That is why Ripple was developed, to try to avoid regulation of money transmitters and they use a bunch of buzzwords associated with Bitcoin to try to confuse people about what is really going on. some people think they can avoid regulation by trying to confuse everyone about what is really going on since the concepts are not well understood by the general population.
I havn't mentioned it in this thread but a portion of the Ripple system means you have to trust certain other users or gateways. it is a complicated system and it is a kluge in an attempt to avoid the money transmitter thing. Ripple is a great centralized platform to trade currencies but it can't avoid the money transmitter issue forever.
@anon I wouldn't say it operates the way PayPal does. Ripple doesn't collect a fee the way PayPal, banks, and credit cards do for transactions. Whatever fees are incurred would be the ones added on by exchange services, which also add on fees for bitcoin transactions.
Ripple declares https://ripple.com/protocol that it is intended to be open-source software that "is not owned or controlled by any person or organization." Last year I spoke with Patrick Griffin, Head of Business Development for Ripple Labs (formerly OpenCoin). He insisted that Ripple is a "public good" not owned by the company. He compared the Ripple protocol and Open Coin to Red Hat and Linux.
In our phone interview, Griffin explained that commerce has not kept up to speed with the flow of information because the rails of payment were put in place in decades before the internet. Ripple's system is designed to bring that world into the 21st century by wiring it together in the same way the internet allows seamless global communication. As the system is "currency agnostic and protocol agnostic," it can be used for any form of currency – including bitcoin -- in any part of the world where there is an internet connection.
Whereas some bitcoiners feel threatened by another digital currency encroaching on their territory, Griffin said that Ripple can actually enhance bitcoin's usefulness by making it easier to use through its universal protocol. "A currency that is not very liquid and very transactional more volatile," he said. Promoting its use by making it easier to spend will make it more stable.
That may be correct, but Ripple is a centralized system and any investment depends fully on OpenCoin, Inc. this has nothing to do with a decentralized currency like Bitcoin other than you can use Ripple to trade Bitcoin along with other currencies.
Bitcoin uses proof of work to achieve a decentralized concensus. Ripple is a centralized system that depends on a central authority, like Paypal. Many scammers are trying to confuse people because many people don't understand the decentralizion nature of Bitcoin and how it works. You may note one of the Ripple Board members just resigned over the way they are distributing Ripple. The system is doomed to fail because they are really money transmitters taking a fee but they do this big song and dance to try to claim it is something else.
The issue is a "decentralized consensus." Terms like "math based currencies" and "consensus," when used with Ripple have no other purpose than to try to confuse people. OpenCoin, Inc. stops operating, then your Ripples (and the associted platform) are useless just as if you bought OpenCoin, Inc. stock.
One of the Bitcoin Foundation board members, Brock Pierce, is also trying to confuse people by claiming to start a Bitcoin competitor that is "backed." This is another case of trying to confuse people because you cannot have a "backed" currency that is decentralized because some entity has to control the assets. There are many people trying to create centralized systems and they are trying to confuse people since many don't understand how a decentralized consensus works.
After I shared my post on G+, my one of my connections commented thus, "Ripple is also the easiest way I've ever seen to send and receive Bitcoin, and then change it for US dollars, and send it to a bank account." That's really what the system is acout, making it easy to clear transactions, no matter what currency you start out with.