If you look at all the hype about ripples in articles such as this one,
you might come away with the impression that ripples is just like bitcoin only better!
A company called ‘OpenCoin’ has had an idea of how to allow ANY currency to be transferred through the internet. You name it, anything from US$ to Bitcoins. Also you don’t need to waste all that electricity mining coins, and waiting for transactions to clear, it happens within about 10 seconds.
Put that in your pipe and smoke it bitcoins!
But how can it process the transactions so quick? Heres a quote from that article.
OpenCoin maintains a single global ledger; transactions are confirmed as the network’s servers automatically check the ledger. The process takes about 10 seconds, the company says.
Well I don’t like that much but still you can send any currency you want. Well, not quite, you don’t send any actual currency, you send IOU’s or in other words debt. Those bitcoins you think you received in your ripple wallet, they aren’t bitcoins. I wonder how well this system will work when people default their debts? Or is there going to be so much trust going around that it just won’t happen.
Or you can send Ripples instead! called XRP’s. So what are XRP? They are units of currency created by OpenCoin with small amounts being distributed to the public in various giveaways and more giveaways planned. OpenCoin claim they won’t create anymore XRP, thats it done with money creation. However if they wanted to … nah they wouldn’t. They do however seem to reserve the right to keep most of them for themselves which is nice.
When you do want some actual hard cash, you can go to an entity called a ‘gateway’ and withdraw it there. Whats a gateway, lets call it what it is, a bank. We all trust gateways not to lie about the amount of reserves they hold don’t we? And they would definately never give out IOU’s for the same bitcoin to more than one person would they?
But at least the name ‘OpenCoin’ implies the system is open source doesn’t it? You’d be able to inspect the code and modify it, build a variation of it? Well no, I’m afraid not, the source code is propietary of OpenCoin, not open source. You might even conclude as I have, that the name OpenCoin has been chosen deliberately to create a certain impression which is actually a deception.
Well if you haven’t guessed it, I don’t trust OpenCoin one single bit. It seems to me like an attempt to bring all the features of the current debt based central banking paradigm to the internet under the guise of a friendly trustworthy and ‘open’ new bitcoin like system. As an added bonus, they might also be able to convince people to hold IOU’s for bitcoins instead of bothering with the hassle of holding real bitcoins. Think of all the ‘dark’ bitcoins swishing around the OpenCoin centrally controlled network. Think of the opportunity for manipulating the bitcoin economy.
There are just too many attempts to create a certain impression which don’t bear up to scruitiny for my liking.
Although they have focused a lot of energy trying to win over the bitcoin community I’d say it appears to be failing from my impressions. At least I can hope. Heres an interesting read from another ripple sceptic