I, and many others agree, Ripple seems like a get-rich-quick scheme for it's creators.
Here is one persons' view:
“© 2013 Ripple” Who is ‘Ripple’? Isn’t this open and decentralized like bitcoin? You have being lied to.
“OpenCoin,” “Ripple,”, the OpenCoin logos and any other OpenCoin product or service name, logo or slogan contained in the Site are trademarks or service marks of OpenCoin (the “OpenCoin Marks”) and may not be copied, imitated or used, in whole or in part, except as expressly permitted in these Terms or on the Site or with the prior written permission of OpenCoin.
Hi there! I’ve being using Ripple since the closed beta, and I feel that the OpenCoin Inc (the for-profit company behind Ripple) scam and fraud attempt needs to be disclosed. Ripple is an inherently flawed experiment at best, and a con operation at worst. Let’s get started.
CENTRALIZED, PROPRIETARY AND CLOSED SOURCE
“Ripple is truly open. No one owns it. Anyone can use it. It’s open source, so anyone can build on top of it.”
- “How Ripple Works”, accessed April 2013.
Ripple is not open source. No server source code has being released, with the paid developers behind Ripple admitting that it is to prevent others from using building something better than Ripple. You pay build on top of Ripple, the same way you can build on top of PayPal or Visa.
Every single Ripple nodes is controlled by a private for profit company. It is centralized.
Ripple is not open. OpenCoin Inc, a private for-profit company owns it (while they make false claims on their website). Anyone can use it until OpenCoin blocks their IP address from accessing OpenCoin Inc sponsored and operated nodes.
ALREADY 51% ATTACKED – AND ONGOING
Every cryptocurrency is subject to a 51% attack. In Bitcoin and similar cryptocurrencies, miners control the network, and if a miner gains 51% of the total network power, then they can choose to double spend transactions. Some alt coins have tried “trust nodes” or “central checkpointing”, however that only moves the 51% attack vector from miners to another entity – which can be 51% attacked.
In Ripple, it is already 51% attacked by the 14 employees of OpenCoin (OpenCon) Inc. They control the server software (written in C++), and they can choose to double spend transactions at will. While it’s highly unlikely that they will do that, a centralized entity means a single target for law enforcement and court orders.
If WikiLeaks started accepting donations on the Ripple network, governments can serve a court order to OpenCoin Inc for them to block and reverse transactions to WikiLeaks. OpenCoin Inc has that power, because the network is centralized. They legally have to. If the Bitcoin Foundation was issued this court order, then all they could do is release a new version of the bitcoin client – and people won’t upgrade, because the code is open source.
I used WikiLeaks as an example. It could be anyone or any entity. Occupy Wall Street. A gambling site. Ripple is under the centralized control of a for-profit, US based corporation – and they have to follow US laws. When they are already 51% attacking the network through the nodes (see this?), all it takes is a court order for them to have to reverse transactions.
XRPs (“RIPPLES”) ARE PREMINED HAVE A HIDDEN 100% INFLATION
Cryptocurrencies are decentralized because they distribute their currency units in an open and fair way. Ripple, despite claiming to be open, has created 100 billion Ripples, and are giving half of them to themselves. The developers took 20 billion XRPs, and the for-profit company took 30 billion. This isn’t appropriately disclosed on their website. The founders want it to be hidden. They don’t want the users to know about it – to know about it’s a currency with 100% inflation.
They are giving away “50 billion”, to their friends and pals, and a tiny bit to the general public so they promote Ripple. Instead of having to use electricity and computational power to earn Bitcoins, you have to be best pals with OpenCoin Inc’s employees (or just be them).
Every single premined cryptocurrency has failed, and Ripple is no exception. There’s a quote that’s often attributed to Albert Einstine – “Insanity: doing the same thing over and over again and expecting different results.”
People use Bitcoin because it allows them to get away from centralized banks and money printing Federal Reserve. Code and algorithms decide where Bitcoins go, not people and court orders. Everyone audit the network and make sure all the transactions are correct, not just “validators” which are all OpenCoin Inc sponsored. More importantly, a centralized system will fail because..
FBI: “UNIQUE FORM OF DOMESTIC TERRORISM”
As of writing, we’re seeing widespread attacks on Bitcoin services, from Mt Gox to Blockchain.info. In a FBI press release, they state that they engage in “infiltration and disruption” on voluntary currencies that are not the Federal Reserve Dollar. What does this mean for Bitcoin, and Ripple?
It’s very very difficult to take down Bitcoin because it is decentralized. Everyone who runs the bitcoin client is a peer, and is passing transactions around, and everyone who mines votes with their hashing power. The bitcoin core dev team could be arrested – but new developers will simply take over.
But with Ripple, all it takes is a raid – like what has happened to the Liberty Dollar – to kill the entire network because of it’s centralization. An update could be pushed out to destroy all XRPs and transactions – and it will work because one entity has 51% attacked the network. That simply can’t be done with Bitcoin unless with an international attack on mining pool operators, and when that happens people will simply switch to solo mining.
INHERENTLY FLAWED “DEBT IS MONEY” MODEL THAT WILL COLLAPSE
You don’t own “Bitcoins” or “USD” or anything on Ripple. You own debt. Anyone worth their salt knows that interest free debt is always worth less than what they represent. Yet the official (and only) Ripple client claims you have “BTC” or “USD”.. you don’t. You own debt.
Take a look at all the Bitcoin services that have being hacked. MtGox. Bitcoinica. MyBitcoin. Instawallet. You could have lost bitcoins you deposited there – debt – but if you held real bitcoins in your wallet, they were safe. When a Ripple gateway or currency issuer gets hacked, because you can only hold BTC and such as debt .. you lose them. But worse. If you’re unable to repay the debt you owe because someone defaulted on you, then the person you defaulted on might not be able to repay their debtors.
And because Ripple is based around debt being “money”, you have to take on debt to send even through it’s not presented in the UI. Every single bitcoin or dollar you sent has being debt. And as there is no limit to how many chains the debt can go.. Your friend might default because their friend of friend of friend of friend of friend has defaulted and the chain continues.
Ripple supporters (aka OpenCoin Inc Employees “speaking their own views”) point at small scale defaults that haven’t taken down the network. Of course it won’t. But a large enough default from a gateway will cause a collapse – there’s a critical mass.
The bitcoin core developers pushed out an update. Now, you can’t own bitcoins, you can only send debt. Pirateat40 is offering 7% a week on his bitcoin debt, and people go with him. Later, when he defaults, the whole bitcoin economy would have completely and utterly collapsed, because that domain name you bought for bitcoins – ahem – Pirateat40 bitcoin debt? Worth nothing. But wait, what if you had your friend’s debt? You could trust him personally! But he trusted a friend who had a friend that defaulted because he had all his coins in Pirateat40 debt. Oops.
The limitless “debt is money” model is inherently flawed because debt is not worth as much as money it represents. For a successful currency system, you need to send solid money – when either that’s USD in a bank insured by the US Govt, or bitcoins proven on the public and decentralized blockchain.
I welcome open debate and discussion on the subject. I’m an early adopter of Ripple – having used it before it was publicly open – but I need to point out what the inherit flaws are, and why Ripple is arguably a scam.
I could have taken my free XRPs and posted propaganda in support of Ripple, but that’s not the kind of person I am. I want to expose the world to the fraud of Ripple and OpenCoin Inc – what you will never see on the homepage.