Aug 6, 2018
Ripple: not a cryptocurrency
Welcome to week 19 of my adventures in crypto (you can find previous weeks here).
This week, I waded through the quagmire of Ripple misinformation, made up a new consensus method: Proof of Usefulness, and bought a plant.
But first…
The profit check-in
If I recall correctly, I went the whole week without looking at this once.
As that bottom right corner swings 15% to and fro each week, it becomes less and less interesting to me.
Unless its positive, then I’m picking out Lamborghini colours.
Now on to the main attraction and — spoiler alert — I’m a fan.
Ripple
Ripple is a company.
XRP is a cryptocurrency.
They are related, but different.
For no real reason, I feel that a bunch of bullet points is the best way to give a Ripple round-up. (For a fun twist, you can pronounce it wipple in your head the whole time.)
- Ripple makes payment software for banks; their flagship product, xCurrent, doesn’t even use XRP, because it doesn’t need to.
- An upcoming product (xRapid) will use XRP as a way to ‘source liquidity’ — it will allow a customer to have access to a fiat currency without previously amassing a big pile of that currency. The big boss says one or two banks should be doing the money shuffle with xRapid by the end of 2018, and dozens by the end of 2019.
- Ripple owns lots of XRP. That XRP is locked up and will be released over the next 4.5 years. Each month, 1 billion XRP are released (about $500m) — available for Ripple to sell on the market. For the last 6 months, they have chosen to return 90% of that into the lock up, keeping a cheeky fifty mil as walkin’ around money.
- If Ripple the company went away, XRP and the network it sits upon would be just fine — although the price of XRP would tank since so many people think that XRP is Ripple.
- Interledger is the protocol that sits under RippleNet. It is being developed as a potential web standard under the watchful eye of the W3C, you can find the unofficial draft specification here.
In the xCurrent product (with no XRP), it is used to join the ledgers of banks together into a network. It could also be used to join XRP, or any other, ledgers together. - The CTO, Stephan, has left Ripple to be with Coil, a company that will use Interledger to create a way of allowing money to flow from consumers to creators on the internet, kicking ads to the curb in the process. This is the part that gets my juices flowing.
- I was originally going to say that Ripple doesn’t really compete with the likes of Bitcoin, but then I heard that they want to make the “XRP ledger more decentralised than Bitcoin or Ethereum”. Shots fired!
(Although at the moment, to be more decentralised than Bitcoin, you just need more than three Chinese factories.)
Ripple is quite a different beast to all the other cryptocurrencies out there. They’re up to almost 300 employees, have truckloads of money at their disposal, and are unapologetically running a business that services banks.
It’s no wonder they draw a lot of ire.
But at the same time, Interledger is not only open source, but hopefully on its way to becoming a web standard (or part of one), meaning that it can then be incorporated into browsers.
If this happens (Interledger becoming a standard that is then built into the major browsers) we will then effectively have money baked into the web and I think that’s pretty interesting.
I’d like to do a deep dive into Interledger at some point. All I’ll say here is that if you’re interested in the Oyster Protocol and Brave and the Basic Attention Token, then you’ll probably be pretty interested by Interledger.
A web of misinformation
As always, for my research I searched for things such as “the problem with ripple”, “why ripple is a scam” and so on. And wow, there’s a lot of stuff out there that is not correct.
Luckily, all one needs to do is spend 25 minutes reading the Ripple website (you don’t even have to believe what they tell you), and it will become easy to detect fake news.
The article 5 alarming reasons Ripple might not be what you think accidentally did a good job of summarising the misinformation out there. Here’s the five super-alarming reasons, paired with my thoughts on the matter:
- “XRP is not Ripple.” This is correct. It’s on the Ripple website. In fact there’s a whole page for it. And the poor CEO Brad Garlinghouse repeats “XRP is not Ripple, Ripple is not XRP” in every single interview he’s ever done.
I am not alarmed. - “XRP is not the currency of the future.” Well that’s just opinion. I think VR won’t catch on and that cheese is pointless, but I don’t expect you to be alarmed about it.
- “XRP is not disruptive technology.” Oh no, the authors appear to have forgotten their first point, and have confused Ripple’s xCurrent product with XRP. They are saying that Ripple xCurrent, (which does not use XRP) is not disruptive, and has some decent competition. Sure. Whatever.
- “XRP is not decentralised”. Not true. If Ripple the company were to disappear, the XRP network would not be affected. XRP can operate just fine without Ripple in the same way that Ethereum can operate just fine without the Ethereum foundation. Because (say it with me) Ripple is not XRP, XRP is not Ripple.
- “XRP adoption ≠ price increase”. For this to be true, then the following must also be true: “BTC adoption ≠ price increase”, “XLM adoption ≠ price increase”, “ADA adoption ≠ price increase”, and so on. They again appear to be forgetting that XRP isn’t Ripple and they’re assuming that the only use case for XRP is Ripple using XRP for xRapid.
But anyone can use XRP just like anyone can use Bitcoin.
On a scale of 1 to 10 I would rank my alarmedness at a solid zero.
There’s misinformation in both directions, of course. Such as with the Reddit post Apple implements interledger in safari on iOS, which says “Apple announced they support of the W3C payment request API in Safari. It uses Ripple’s Interledger”
This got almost 500 upclaps.
Also, this is not true.
The Payment Request API is an established web specification. It has been implemented in Chrome and Edge and Safari and has nothing to do with crypto.
It does not use Interledger and the specification makes no reference to Interledger.
The person who made the post shows a screenshot of a document called the Interledger Payment Method (which is an unofficial draft written by a Ripple employee) which references the aforementioned Payment Request API (as in “maybe one day Interledger will be used by the Payment Request API”).
Interledger is exciting, but it’s not in your phone just yet. If you’re super keen (you should be!), there’s a reference implementation in JavaScript called Interledger.js that’s just waiting for you to tinker with it.
The verdict: XRP as an investment
I’m quite sure that no one knows how much the price of XRP will reflect the success of Ripple the company.
In a technical sense, they are disconnected (did I mention that already?), but in reality there is probably some significant correlation between the success of Ripple and the price of XRP.
The question is, I suppose, how will that correlation hold over the years?
Later this year Ripple plan to go live with xRapid, their first product to actually use XRP. I’ve gotta believe that this will have a positive effect on the price.
Iterledger also has the potential to be huge. It doesn’t rely on XRP to function (it’s inter-ledger) but Ripple believe that people will choose XRP because it’s fast and cheap.
Maybe five years from now, browsers will ship with Interledger abilities built in, people will default to using XRP because that’s what’s in the readme, and hey presto, XRP becomes the most used currency in the world.
So, even though I’ve gone on and on (and on) about Ripple and XRP being different. I’m going to go right ahead and grab $500 worth of XRP because I like Ripple.
Suck it, common sense.
I’m starting to get it about money
Something clicked this week and I can see quite clearly now that something is wrong with digital money. (Let the mocking begin.)
I can’t buy a sandwich and directly pay the shop owner in money, unless it’s physical. I can’t pay my electricity bills over the internet straight from me to the power provider, and even shifting funds to my llama cleaner requires a third party.
I have money, I want someone else to have that money, but we can’t work it out, just the two of us. We need this massive piece of fiscal machinery just to move $4 over the counter in exchange for a coffee.
The more I think about it, the weirder this seems.
Crypto-anger
Having spent the week researching Ripple, I’ve come across a fair amount of anger, so I thought I’d give that topic a once-over.
I have a theory that the people who are really interested in the technology don’t get angry. I mean, it’s all pretty interesting, this crypto stuff.
But a certain subset of ‘the community’ appear to think of all this like some sort of sporting event (coinmarketcap is the leaderboard). They have picked their favourite team and root for them with great fervour.
For these people it isn’t about the technology, it’s about the drama and the characters and the competition.
I think these are the people getting mad on Twitter (the world’s #1 platform for seeking approval).
It’s a little bit comical to watch someone get really worked up about one particular cryptocurrency that they don’t like, because it doesn’t fit with what they believe a cryptocurrency should be.
It’s like someone going shopping for a car and yelling at boats.
I mean, I really hate sun dried tomatoes, but I don’t go writing blog posts bout it.
Maybe I should. Perhaps I’d make it a vlog. I’d call it “David yells at food” and start every episode by saying “What. Is. Up. YouTube” and do that thing where I talk to one camera but also film from another camera so you can see what I look like from a slightly oblique angle talking to a camera. Do they teach that on the first day of film school or something? It makes me very mad.
OK that’s enough of that.
Proof of usefulness
One of Bitcoin’s biggest downsides is the fact that it uses — some might say ‘wastes’ — an enormous amount of electricity.
So I’ve been wondering, what if you could take the proof-of-work mechanism — with thousands upon thousands of processing machines doing work that is ultimately discarded — and somehow get it to do some useful work.
Have you have heard of Folding@home?
“Folding@home is a project focused on disease research. The problems we’re solving require so many computer calculations — and we need your help to find the cures”.
Now you’ve heard of Folding@home.
Doesn’t it seem wrong to you that on one hand there is a need for computing power that will ultimately save lives, and on the other hand there is a mass of computing power being ‘wasted’ to secure a cryptocurrency?
How hard could it be to combine the two?
Maybe it’s possible to break down the protein folding work that Folding@home does into chunks that take a predictable amount of time (e.g. 10 minutes). If you automate that process of building 10-minute chunks of work, then you could have a difficultly adjustment just like there currently is.
Maybe that’s not possible — to get the timing reliable enough — so perhaps you could have something in the consensus mechanism like: You must earn the right to mine a block by solving a protein folding problem.
Your overall chances of mining a block in a given day would stay the same, since everyone must follow the same rule. The protein folding might take 2 minutes or an hour, it wouldn’t matter in the long run provided the work is evenly distributed.
Maybe it just isn’t possible to break down protein-folding work. But maybe it is possible for SETI work, or something else I haven’t heard of.
Lastly, you’d need a way to submit work to the network, perhaps to be voted on by nodes. Since you probably don’t want to be instrumental in cracking passwords, you might require proof of who the person is. So a proposal to submit proof-of-usefulness puzzles to the network might take the form: “we are Folding@home and our signed proof is at https://foldingathome.org/pou-proof-key.” — they then have a licence to publish puzzles for 1 month, or something like that.
Details details.
Anyway, that’s just some thoughts that have been rattling around in my skull. I’m sure this has already been discussed in great detail somewhere.
Next week
I’ve been itching for a while now to get my hands dirty with IPFS. And as of this week, I’ve also been itching to get my hands to a similar state of uncleanliness with Interledger (then Ripple and Protocol Labs can duke it out over who gets to hire me).
But these posts take about 8 hours to write and the research is probably another 10–20, which is most of my time outside my day job.
Also, I’ve looked at most of the coins that seem promising and I’ve got no interest heading into ICO town because that’s just straight up gambling.
Even heading further down into the top 200 seems like a whole lotta guesswork — I reckon I’m pretty good at spotting crap, but I don’t think I’m any good at picking what the rest of the world will think is great.
So, I’m considering taking a break from the weekly write-ups of cryptoassets, and instead actually building something of substance and writing about that.
Maybe if I stumble across something interesting (Tezos keeps doing a little dance in my peripheral) I’ll dive into that and do a write-up.
We will see. (I’ll continue to do the $500/week into BTC, ETH and XRP.)
One last thing, did anyone do that memory thing last week? Did it stick? Impact, galaxy … … … stomach … ancient? Anything?
Hey thanks for reading. You are an excellent person in almost all respects.
