Ripple was established in 2012. It was one of the lucky winners of what was ostensibly their first formal promotion upon the inception of the Bitcoin Talk conversations. I believe I got roughly 30,000 XRP tokens if my memory serves me well. Following the acquisition of these tokens, I tried a few different approaches to figure out what had gone wrong. A mentorship financial record whereby someone could make loans while remaining, effectively, money independent would have been new, exciting, and perplexing.
The XRP Token
The XRP token, assuming it had trouble understanding what that meant, was even less understood. Why did you do it? At the time, the only explanation given was that it was intended to prevent network spam. A token with a total quantity of 100 billion that serves merely to “prevent spam” didn’t sound thrilling or worthwhile to me. That’s why I exchanged my free tokens for bitcoin as soon as possible.
It wasn’t until much later, while reading Peter Todd’s current explanation of Ripplepay’s origins, that I began to understand not just how Ripple works, but also what I could only have surmised about the XRP coin instinctively. Ripplepay, which existed before Ripple and long before bitcoin, appears to have been a participant financial organization formed in 2004 by Ryan Fugger. The above ancient webpage, which for some reason still exists, demonstrates something in simple terms.
In essence, Ripplepay enables developers to create as well as exchange cash among network members that respect one another. Consider it the online equivalent of someone writing a $50 gift certificate on a Post-it note and marking it. This would cost about $50 if the same notary notarize the note. That is nothing more than an IOU, a basic concept that supports how institutions work but does not issue fiat cash.
It’s much easier to set up a repayment process in the real world than it is to create and transfer IOUs or Post-it notes somewhere in the middle. Individuals cannot rely on each other’s trust through monetary transactions. On the other hand, they must exchange something of value. Rather than accepting a counterparty’s risk, the parties acknowledge the underlying the value of the transferred product. We’ll need a non-counterfeitable inflation hedge as a result. This is similar to gold or monetary systems.
It’s eerily similar when you try to automate it. Ripplepay, as a billing system, appears to have had a lot more technological hurdles. The company makes this to overcome than merely a bitcoin-based virtual money scheme. For starters, you won’t have to worry about making multiple payments in money transfers. When you deliver an IOU for Alice, you can still provide the same number of Bob. In this case, there’s no way this will be the same obligation if you release it repeatedly. You’ll simply own one of them. On the other hand, allowing people genuinely spend the economic variables property is fraud.
There is no requirement for something like an international agreement. May it be on a payment method that Bob hasn’t had to comprehend or accept in order for me to know how much money he owes Alice. It requires Bob and Alice to agree on how much we regard each other to form a localized majority. However, in a trading platform like this, users must have trust in one another.
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