yes, Bitcoin is an experiment in decentralization. Like most systems, Ripple started out with an entity having full control.
a 51% attack does not mean "full control" and no enity had 51% control. They have a pool where a bunch of people switched to a different pool once they saw the potential for bad things to happen.That is how an incentivised decentralized system works. the links and quotes you point to are hyperbole written by someone who doesn't understand how the system works.
We had the same kind of hyperbole last year when Dan Kamisky said that one entity controls the majority of mining hardware and he predicted Bitcoin would collapse or at lease change the "proof of work" system by the end on 2013. Bitcoin is full of people making hyperbolic claims to get publicity or do pump and dump schemes.
@anon Bitcoin's reliance on 51% control of the Blockchain opens it up to full control and vulnerability. And some say that has happened with GHash. See http://hackingdistributed.com/p/2014/06/13/in-ghash-bitcoin-trusts/#sthash.nwdzbBnp.dpuf
The main pillar of the Bitcoin narrative was decentralized trust. That narrative has now collapsed. If you're going to trust GHash, you might as well store an account balance on a GHash server and do away with the rest of Bitcoin -- we'd all save a lot of energy. This is a big deal, and it would be a mistake to downplay it in the hope to buoy Bitcoin prices. It will be difficult to attract new people to Bitcoin when it's controlled or controlable by a single entity. If those people were willing to trust a single entity, they could have dodged inflation by putting their fiat into World of Warcraft or subway tokens. They came to Bitcoin because it was decentralized, and now it isn't. The first step is to admit that we have a problem.
There is one big difference, anon. If the Bitcoin system breaks or fails, your Bitcoins are gone. And all you can have on the Bitcoin system are Bitcoins. If the Ripple system breaks or fails, your funds are still held by the gateways you chose to hold them and they still owe those funds to you. The Bitcoin system is the custodian of all the assets it handles, the Ripple system is not.
(I am one of the original architects of Ripple and am an employee of Ripple Labs, speaking only for myself.)
Simon: You don't trust Ripple with your money, that's not how Ripple works. Ripple basically just atomically moves funds from one place to another. At no time does the Ripple system have custody of the funds.
The way Ripple works is that some entity you trust that you choose holds your money. Ripple permits you to easily direct that entity to pay your funds to whomever you choose. If Ripple somehow fails or ceases operation, then perhaps you can't make payments. But the entity you trusted is still holding your money and still owes it to you.
@Simon Ripple is working with banks, so that may give you the best of both worlds. As for FDIC, that does protect your deposits, but from my experience it does not protect you from bad checks. If someone bounces a check on you, you also have to pay a fee, and that can go as high as $30, too. So there is always some element of trust in any financial transaction.
I agree, that based on what I read here it seems cheaper and faster. But why would anyone trust his/her money on the unknown people who run this business? You do not know them they can just pull up their tent one day and dissapear with everyone's money. US and European banks are substantial large organizations whith FDIC backing. Hence, while they are VERY slow and VERY expensive, at least your money is safe with them. The best outcome for average people and businesses here is that this new competition will force banks to become reasonable with both their fees and their execution speed. In fact some smaller banks have been moving into this direction. My bank has sped up transfer times a LOT during the past couple of years, from many days to a single day. The wiring fees are still very high at $30.
If you talk to people who have been involved for years, such as Bitcoin developer Mike Hearn, they say the entire purpose of the Ripple (well before there were any employees) concept was to avoid the money transmitter issue. No matter how you dice it and slice it, destroying Ripples to facilitate a transaction is a transaction fee. It remains to seen how regulators will view it in the long run.
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.
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