forked from cheng/wallet
195 lines
8.1 KiB
HTML
195 lines
8.1 KiB
HTML
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</style><title>Ripple</title></head><body>
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<p><a href="./index.html"> To Home page</a> </p>
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<h1>Ripple</h1>
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<p>This rambling explanation fails to explain what
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level of anonymity is provided, or how it is provided.
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We want aggregative anonymity, cryptographically
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secured, with money flowing on chains of trust.</p>
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<p>Fails to explain need for integration with
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reputation management, fraud problem, ordering, person
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to person transactions</p>
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<h2>How internet money should work</h2><p>
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The idea is that an organization will issue some kind of money
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equivalent – promises to deliver US dollars, promises to deliver gold,
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shares, promises to deliver some service. Let us call the organization
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issuing the money Big Money Issue Corp, and the money
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Big Money Issue Corp OUs. </p><p>
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You will be able to buy Big Money Issue Corp OUs from
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Bob, and use them to pay Carol for something. You will
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be able to do this over the internet by instant
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messaging – dropping some money into the instant
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message. Let us suppose you pay Carol to deliver some
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cigarettes. Carol will know you paid her, and what you
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paid her for, and you will be able to prove that Carol
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agreed to deliver cigarettes for a certain payment and
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that you paid to deliver some cigarettes, prove it to
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the whole world, which ordinarily you will not want to
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do, but you might want to do if the deal goes bad.
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</p><p>
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Now the most obvious way to make this work is that the
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people operating the financial system know everything
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about everyone, and all transactions are on their
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computers, readable by the government, who can thereby
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tax everyone. </p><p>
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We don’t want a technology where everyone deals
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directly with Big Money Issue Corp, because then Big
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Money Corp will be under pressure to refrain from
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dealing with this or that person or group, and then it
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will have to know its customers, and for a big
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organization to know its customers is likely to be
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inefficient for the big organization and burdensome for
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the customers. </p><p>
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We want payments to be provable, and linked to deals,
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so that if something goes wrong, the customer can do
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something about it – but provable and deal linked
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payments run contrary to anonymous payments. </p><p>
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Cypherpunks had a vision of how anonymous funds
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transfer would work on the internet, which vision ran
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into some disastrous obstacles. The cypherpunk vision
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was built around Chaumian anonymity, but this
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technology does not in itself provide many capabilities
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that are necessary for internet money, and makes
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implementing those capabilities more difficult. In
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the Chaumian vision, everyone dealt directly with Big
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Money Corp, but Money Corp could not link Bob’s payment
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to Carol receiving money. Unfortunately, this meant
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no recourse for Bob if he paid and Carol stiffed him,
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plus the fact that everyone dealt directly with a
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single center provided a single point of control
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</p><p>
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<a href="%3Chttp://ripple.sf.net/">Ripple</a> is a
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brilliant insight, great idea, but suffers from the
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critical mass problem that afflicts any proposal to
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provide competition to the existing government run
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money system. </p><p>
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In addition to the critical mass problem, governments
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tend to treat competition as illegal, once the
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competition gets large enough to to make a dent -
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observe what is happening to e-gold. E-gold is
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attempting to comply with overbearing and intrusive
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regulation to the great detriment of its business and
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its customers, but the government has no intention that
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it be possible for e-gold to comply. Of course a
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decentralized system is a lot more resistant to this
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than a centralized system such as e-gold. E-gold looks
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like being the Napster of internet money – one that
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showed the way, though it was ultimately suppressed.
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</p><p>
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Therefore, in my opinion, the best prospect for a
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decentralized money system such as ripple is in some
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activity that is already somewhat illegal, for example a
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file sharing system, in which the participants grant
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each other upload credits. </p><p>
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Ripple, as it stands at present, does not really address
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the routing problem, (in the sense that the proposed
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routing algorithm sucks), and indeed does not need to,
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for there are very few participants. For a file
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sharing system, would need to be more DHT like.
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</p><p>
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To the extent that a payment system is anonymous, tends
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to be used by ordinary criminals and ponzis. This gives
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government justification and excuse to shut it down.
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</p>
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<h2>Requirements of an internet payment system:</h2><p>
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Payments should be identifiable by the participants, but
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not identifiable by outsiders, and should automatically
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generate and maintain the appropriate records on the
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participants machines. If you pay a net presence for X,
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you should be able to prove to outsiders that you paid
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that particular identifiable net presence for that
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particular X, but outsiders should not be able to prove
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it except with your assistance. This requirement
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presupposes a mechanism for identifying net presences -
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Zooko based yurls, and/or authorized certificates.
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Since we obviously want to transfer money between people
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who do not necessarily have authorized certificates,
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have to support yurls, which means we have to first have
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a yurl system, which at present we do not. </p><p>
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To resist shutdown, and keep costs low, a payment system
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needs to inherently implement "ripple", making every man
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a bank. Ripple, however tends to reduce the profits of
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the currency operator, and is some work to implement, so
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is generally not done. </p><p>
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The problem with Chaum’s anonymous cash, and Brands'
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anonymous cash, as generally envisaged, is that it
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relies on a single central server, with which everyone
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has a relationship – a star shaped network. Internet
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networks really have to be power law networks – neither
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star, nor entirely equal peers. A single central server
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is a central point of failure, a point that governments
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can attack. </p><p>
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"Ripple" means that if the Bank of Whatsit implements
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ripple, then you don’t need an account with the Bank of
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Whatsit. You can do fine with an account with someone
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who has an account with the bank of Whatsit. Hey
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presto, a power law network. </p><p>
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So if you want to buy a domain name registration from
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Wonton, a registrar that has an account with the Bank of
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Whatsit, and you have an account with Joe, who has an
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account with the bank of Whatsit, then Joe’s machine
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tells Bank of Whatsit to pay Wonton. The Bank of
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Whatsit only knows that Joe payed Whatsit. Joe knows
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that you paid Wonton, but does not know what you paid
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Wonton for. Wonton knows you paid them through the Bank
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of Whatsit, does not know or care who Joe is, knows what
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you paid them for, but cannot prove what you paid them
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for. You know, and can prove, that you paid Wonton, and
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can prove what you paid them for. </p><p>
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Now what I have described is all account based – no
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Brand style or Chaum style anonymous tokens. But if the
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Bank of Whatsit implements ripple, Joe, or anyone else,
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*can* implement Chaum style or Brand style anonymous
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tokens. Further, you can pay Wonton using Joe’s tokens
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even if Wonton has no relationship with Joe, and has
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never heard of these new fangled tokens, and the Bank of
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Whatsit has never heard of them either, for through
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ripple you can turn the token payment into an ordinary
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account payment from the Bank of Whatsit. </p><p>
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Thus if we had payment guys implementing ripple, they
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could avoid the heat that is likely to arise from
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implementing Chaum style tokens, indeed be entirely
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unaware of either those tokens or that heat, combining
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the anonymity that comes from Chaum style tokens with
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the anonymity that comes from the faceless crowd of a
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power law network. </p>
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<p style="background-color : #ccffcc; font-size:80%">These documents are
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licensed under the <a rel="license" href="http://creativecommons.org/licenses/by-sa/3.0/">Creative
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Commons Attribution-Share Alike 3.0 License</a></p>
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