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Ripple Payment System

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I'll explain how the ripple payment system works conceptually by comparing it to traditional banking system using SWIFT for money transfer as well as get in to a bit about the origins of money and how that related to Ripple. I'll cover rippling, trust lines, gateways and the consensus protocol for avoiding double spending. Videos in series: - Cryptography Intro https://youtu.be/MjHDWWLAQlM - Bicoint Part 1: Wallets and Transactions https://youtu.be/WmkrOwrxNGk - Bitcoin Part 2: The Blockchain and Mining https://youtu.be/VV9KQFwIYxs - Bitcoin Part 3: Smart Contracts https://youtu.be/No8bacycrBQ - Ripple Payment System https://youtu.be/_TXduhKbe-c
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Coca Cola (6 months ago)
good video but felt not enough was explained about consensus and how validatrs dont actually validate transactions they order them. also, it may not have been out at the time but using the product terms xrapid, xcurrent, xvia would be helpful. i believe you start with xcurrent and go into xrapid.
Coca Cola (6 months ago)
wow thank you for that response. i suppose i was referring to consensus specifically. 'it doesn't have the rules for whether a transaction is valid or not, it doesn't have the rules for what a transaction does, what a payment does, what an offer does. those are all part of the specification and we can all agree on them. the only thing that will cause a problem is the double spend problem because we cant agree on which transaction is valid because there is no rule that we can all agree on which transaction is valid" - joel katz the ordering part was dicussed in "Ripple Tech Talk: Understanding Consensus (Mar 2015)" vid
Erik Engheim (6 months ago)
Thanks for your feedback ZD :) To see how validation works, you should look at my previous videos on bitcoin, in particular part 2 about blockchain and mining. Ripple nodes will validate a blockchain similar to Bitcoin, so I did not feel like repeating that in this video. The Ripple video is primarily about what is DIFFERENT from Bitcoin. Both Bitcoin and Ripple has a block chain, where nodes/miners can check the signatures for transactions and make sure they are not double spent. Not sure if I understand what you mean by "how validatrs dont actually validate transactions they order them." Ordering transactions is strongly related to validating them. A transaction is not valid if it is not ordered correctly. I can put a transaction spending 10 coins, unless there was a previous transaction sending me those 10 coins. So validating transactions means both checking that their signature allows the person who made the transaction to spend that money as well as making sure the order is right, so they don't double spend. You could say bitcoin mining is in large part about ordering transactions as well. You simple assume the valid order or blocks is the chain which is longest, which is possible to validate. Part of the problem is perhaps the different usage of the word "validate". Anybody can in principle validate a Bitcoin or Ripple block chain. You simple look at the signature of all transaction, the hashes of the blocks containing the transactions etc. However the validators I talk about in the video are the nodes which participate in picking the next block, through voting. The of course also validate the previous chain. But you could do that in software as well. However if you don't participate in the voting, you are not labeled a validator. If you run a full wallet on Bitcoin, then you keep the full blockchain yourself and validate the whole chain yourself, to make sure that miners are not making up stuff. You can then catch if somebody made a fake block e.g. The Bitcoin miners themselves will of course also perform this kind of validation if they are honest, and don't try to make up fake transactions. If they make fake transactions however every full node will see that and disregard that fake block. None of the other honest miners will accept that block and so it becomes a side chain. " xrapid, xcurrent, xvia would be helpful. i believe you start with xcurrent and go into xrapid" Absolutely, as you guessed those terms are fairly new so I had to lookup myself what corresponds to the technology I discuss here. xRapid is essentially what I describe. I know very little about how xCurrent works. It seems like a very bank specific technology, not something regular people could hook into and use for money transactions. xCurrent however appeals to regular banks because it is essentially a modern version of SWIFT. They don't have to deal with XRP, trust lines and all sorts of modern things ;-) Ripple however seem to want to get people onto xRapid over time. xvia I don't know anything about.
goom goom (7 months ago)
Terrible
Benjamin Rosen (8 months ago)
hi erik, thank you so much for your video! this is very deep and enlightening explanation. one thing that i'm struggling with though is the practical applications of ripple. which gateways allow you to extend trust lines to them? there's many xrp exchanges but i can't find an exchange that will give me USD - Kraken for example that I can send to someone else who trusts Kraken. let me kow if you can explain how this works in practice
Erik Engheim (8 months ago)
I think you still can. At least you could do that with the wallet Ripple maintained themselves back in the day. I made two different accounts then and created trust lines between them and tried transferring balances of dollars and euros between my different personas. That worked fine. When I had to transfer my account to Gatehub, I could still see my dollar, euro etc balances and associated account number. I believe there was also info about trust lines. However I have not since done any experimentation on this. The technology to do this should still be in the Ripple protocol. However a wallet maker doesn't necessarily expose all that functionality. So in theory you should be able to offer your own IOU, but they wont ripple through the network of course if nobody has placed any trust in you ;-)
Erik Engheim (8 months ago)
Benjamin, I actually thought there was more, but I have not kept up to date on this. There is so much going on in the crypto currency space now that simply getting a handle on the multitude of other coins is demanding enough ;-) Did you check Stellar and how the situation is there? It is kind of on my TODO list, but I am currently spending time understanding IOTA, Ethereum, PIVX, ZCoin, BitShares, Filecoin, Sia, Steem. A lot of interesting stuff going on now. Exciting times!
Benjamin Rosen (8 months ago)
also, can I issue my own IOU on the ripple network? i.e. usd - benjamin? where i would be able to send someone a debt claim backed up by their faith in my repaying them which could be traded to facilitate money transfers between people? or has that function been basically shut down and relegated to stellar?
Benjamin Rosen (8 months ago)
thank you for your detailed answer! that makes a lot of sense. kraken does not issue USD-kraken iou's because it is not a gateway, whereas gatehub does issue usd-gatehub iou's. I think what was confusing me is that the only gateway i could find is gatehub. all of the gateways on gatehub are owned by gatehub (gatehub fifth for example), apart from the gold one. and the gold one doesn't even let you make an account with them so it's practically also just another gatehub gateway. so is my impression right that gatehub is the only gateway?
Erik Engheim (8 months ago)
Hi Benjamin, glad you liked it. Let me try to clear up some possible misconceptions. Gateways and Exchanges are NOT the same! An Exchange is just a general purpose marketplace for selling and buying different crypto currency. Kraken is an exchange, NOT a Ripple Gateway! This means you can trade dollars, euro or other crypto currency for XRP, but that is pretty much it. You can't use ripple's payment network system from them. According to kraken, they may add Gateway functionality in the future however: https://support.kraken.com/hc/en-us/articles/201396747-Is-Kraken-a-ripple-gateway- A ripple gateway on the other hand understand trust lines and can hold balances in different assets such as dollars, euros, gold, bitcoin, lego blocks or whatever they chose to offer. A gateway can also facilitate transfer of ownership of these assets to other people. I personally use the GateHub ripple wallet at the moment. It allows you to connect to various ripple gateways. You can see a list of the gateways GateHug allows you to connect to and the assets they allow you to hold a balance in, here: https://www.gatehub.net/gateways As a cool example notice there is a gateway in the list called BPG, located in Slovenia which allows you to hold balances of gold. You might also check out another crypto currency system called Stellar at https://www.stellar.org The reason why is because it is a fork of Ripple created by the original founder of Ripple. Stellar today has much more focus on the things I discuss in the video such as rippling, trust lines etc, than Ripple has today. When I made the presentation years ago, Ripple was focused on creating a payment system as an alternative to the banks. Today however they are focused on working WITH banks instead. Ripple hence on their page present a more business oriented facade. But if you want to understand the technology, Stellar might be easier as they seem a lot more focused on developers and the community. Ops almost forgot your last question. Yes in principle you should be able to send dollars, euros, gold or whatever to people who trust the same gateway as you. Bear in mind, the practical usage of this is currently somewhat limited as we don't have enough users of Ripple and enough gateways. E.g. if my regular Norwegian bank was a ripple gateway, and ripple was widely used by people in Norway I could use ripple to split bills and send money to friends and family in Norway.  So at the moment, the main utility of Ripple is as a backend to banks for faster and cheaper inter-bank transactions.
Karol Strzelec (8 months ago)
Ripple is Big Shit !!! - never trust the banks !!
prnavd (8 months ago)
Mate at least use simple names. not everyone knows stars wars characters.
Erik Engheim (8 months ago)
What! Superman over Batman!? No way prnavd ;-) Supeman is such a goody-two-shoes. Batman from the latest lego movies is probably my favorite. So immensely flawed  but fun and interesting. Hahaha maybe I can have a crypto example with batman sending messages but not trusting Superman. They guy has serious trust issues, which could have been kind of comical to exploit in explaining various trust based systems. You are probably right that superheros are better know than Star Wars. I'll definitly explore that choice in future videos. I am currently trying to find an angle for explaining Ethereum.
prnavd (8 months ago)
Perfectly answer. Yes, that's the issue, trying to appeal to everyone. It works so well when explaining using context that the audience is already familiar with. But finding that generic context is not easy. Ohh anything but not Alice and Bob. haha. Superheroes name would be great, haha, but again that's because I'm very bias to myself and not everyone may know the characters too. However, I'm pretty sure more people are familiar with superheroes then star wars characters? ps superman>batman
Erik Engheim (8 months ago)
Hehe, I guess you can't please everyone. I'll keep it in mind, but I am not necessarily trying to appeal to everyone. I think there are many who are just bored by listening to Bob and Alice all day. My inspiration from this was watching a guy talk about graph theory using South Park. Usually this is a rather dull subject but it was a lot easier for me to follow when he was using South Park characters because it was quite funny, and you could relate what he was talking about in the theory to what you knew about the characters. But of course if you don't know South Park, that comparison has less value. Which is kind of my issue as well. My thinking is that it is better to have multiple videos on Ripple tailored to different people than just one. But please come with suggestion of other characters or analogies to use. There could be other ones with broader appeal ;-) How do you feel about e.g. using super heroes and super villains instead? Superman, batman, the joker etc?
Sun Rabbit (8 months ago)
OK I understand this part. What I don't understand is from a previous video comparing Ripple to SWIFT as to how the transactions get verified and settled. What are the candidate transactions being compared against? I can understand that both SWIFT and Ripple require verification of the existence of the recipient's account so that the sender's funds dont hit the Unapplied Funds Account, but other than that, there's only ONE party (computer) that initiates a payment transaction and that's the sender. So if Ripple has to compare that transaction to itself (??) repeatedly until the system has 100% certainty of what exactly? I can understant the temporary freezing of the sender's account (to prevent double-payment) but the recipient's? Why? I understand the difefrences between Ripple and BTC, but since there's no mining, what is the economic incentive for each of the nodes to process transactions and how is that calculated. For the record, I'm a former high-level banker and I got into BTC back in 2011. Normally I never had to actually deal with any of this back-office stuff but I do need to at least understand the basics. Yes, the SWIFT system is inefficient, but that was conceived back in the 60s and it hasn't really changed a lot since then. You compare Ripple to elements of the Hawala system but Hawala requires active balances on both sides, where incoming transactions offset outgoing ones and only in case of a larger movement is a block transfer actually necessary. I get that. What I don't get is why a system of distributed mini-ledgers is better than a centralised one where each of the nodes has a mirror (Loro/Nostro) at a central server and just updates its own mirror with the central server consolidating all the mirrors just like true central banks do (NOT the US Fed) but most other countries' central banks do.
Erik Engheim (8 months ago)
Thanks, I am on the same page now with your Hawala explanation. So the rippling approach used in Ripple is as you say based on two nodes directly connected to each other having to trust each other fully. However since Ripple is able to maintain a database over all the people who trust each other, it can find a path of trust through multiple people. However my impression is that the Ripple guys aren't promoting this approach to money exchange much anymore. Instead they focus on money exchange using gateways, which has more in common with normal banking, in that we put our faith in some sort of public company. I agree that it is a big problem that we have these isolated islands of knowledge. Software developers don't know finance very well and finance guys don't know software very well. I have the same problem as you, but from opposite perspective. Usually when making software I seldom get to meet the people using the software. Often I don't fully understand how they use it and what their needs are. The information just get relayed to me through several layers of people. Agree that fiat to crypto is the weakest link although the exchanges seem to begin doing many smart security practices. E.g. coinbase puts something like 90% of customer money in what we call cold storage. That means the private keys (see my cryptography video), are stored on paper or USB stick offline. No hacker can then get to it, until of course the money has to be spent and they have to plug it in to a networked computer. One thing that I notice worries me with crypto is that everything relies on me having control on a secret private key. Lose that and no customer service anywhere can help me. There is a certain comfort with traditional banking that as long as the account bears my name I can't lose the money just because I forget my login password.
Sun Rabbit (8 months ago)
Thank you for your response! I understand the logic behind it now, and why it's advantageous to have independent multiple nodes that don't cooperate to validate each transaction. It kind of reminds me of companies that crowdsource large amounts of simple tasks that only a human can solve, such as determining whether a photograph of a sign is in English or some other language, and then assigns it a value based on the number of users who say one way or the other. That way, even one individual human who makes a mistake or is careless is "outvoted" by the others who are correct. Yes, that makes sense. About the Hawala system: in the Hawala system, if you have two nodes (people) they MUST trust each other, and usually they're family members where let's say one brother lives in London, and the other in New York. The active balances they each have are for incoming and outgoing payments in amounts up to that balance. Let's say that the brother in London has an account with 1000 USD in Pounds, and the brother in NY has 1000 USD. Customer wants to transfer 500 USD to London, gives it to the brother in NY, who simply TELLS his brother in London to pay out 500 USD to a different customer. No actual money gets transferred across the Atlantic, because the brother in London will get a transaction from a customer who wants to transfer 500 USD to NY, where again, he simply tells the brother in NY to pay that out and no actual money is transferred. BUT say a customer came to the London brother wanting to transfer 1 million USD to New York. In that case, they would select a third brother who would physically (or in some other way) transfer that money to New York. In other words the incoming and outgoing transfers usually cancel out. Client identification on both sides is simple as well and in the days before the internet, the brother in New York would fax the brother in London a picture, say, of an elephant, with the notation that he is to pay out exactly 523.58 USD to anybody who comes to him and shows him that same exact picture and knows the exact amount of the transfer. This assures client anonymity. Sorry about my excessive usage of banking terminology but I thought you were a banker as well. However, that is the problem with most banks (at least here in continental Europe) where the top management knows nothing about back-office processes or about infrastructure. I think that in the future, all bank managers will be programmers as well as bankers because IT is every bank's weakest link because the bankers don't understand the IT guys, and they never talk to each other. I was a bank manager for many years and I never even met anybody from IT or the back office personally, just via chat. Same way I think that in the world of cryptocurrencies, it's the fiat-to-crypto exchanges that are the weakest link, not the blockchain technology itself.
Erik Engheim (8 months ago)
Sun Rabbit, good questions. I agree, the part regarding transactions was not covered well enough. Bear in mind that when answering you, that I am primarily software engineer, who got into this, and I don't have a banking or finance background, nor am I a native english speaker, so not all the terminology you use is 100% clear to me. But I'll try to address each question. 1) Clients, people like me and you initializing a transactions on our computers and BROADCAST these transactions to the network. This applies to all crypto currencies, whether ripple or bitcoin.  This is a very important difference with SWIFT. Remember regular customers don't create transactions in SWIFT and send it out on the network. It is the customer's bank which creates the transaction and send the information through the system to particular other banks or branches. In regular banking you can't have the customers themselves broadcast transactions because you can't trust that they do it right or don't try to scam the system. So you need a bank as a gatekeeper. So MULTIPLE ripple nodes will pick up the same transactions. Not just one. They all try to validate the transaction and then broadcast to each other these candidate transactions. So you might ask WHY? Why send the same transaction to multiple nodes. Why can't just ONE node process the transaction as done in SWIFT? The reason is that no node has special trust or authority. You, me or anyone can in principle setup a Ripple node. Why would anyone trust that I alone validated a bunch of transactions. I could be lying or cheating. The security is in a majority of nodes validating the same transactions and the majority agreeing that these transactions are indeed valid. So let me try to sum that up one more time. With Swift you got one trusted individual, your bank validating and processing each transaction. In Ripple every transaction is voted on. There is no single trusted individual. Rather we trust the voting process. 2) Mining and Incentive. You are right there is no strong incentive in the Ripple network to perform validation. OTOH performing validation is much cheaper, so you are not sacrificing as much processing power doing it. Ripple seems to rely more on key financial institutions and technology companies wanting Ripple to be successful. Because banks have an interest in using Ripple for performing cheap transactions, it is in their interest to participate in validation to keep the network alive. You can already in this respect see how Ripple is much more of a system for the establishment than for the rebels. You typically know who these nodes are. There is much more transparency in Ripple with respect to who participates in validation. You see e.g. see list on Ripple's page where they list validators such as Microsoft, MIT and various known banks and financial institutions. 3)"You compare Ripple to elements of the Hawala system but Hawala requires active balances on both sides, where incoming transactions offset outgoing ones and only in case of a larger movement is a block transfer actually necessary. I get that." Okay this is the part I don't know if I understood. What is an "active" balance as opposed to just a balance? To my understanding two Hawala traders/representative or whatever you call them can have a relationship with each other. Say we got Ola in Norway and John in the US. A customer, Bjørn comes to Ola in Norway and says he wants to transfer 50 dollars to Rourke in the US. The Ola Hawala guy then accepts 50 dollars from Bjørn. He calls John in the US and says he wants a transfer of 50 dollars to Rourke. John accepts this and hands out 50 dollars to whoever can authenticate themselves as Rourke in the US. John writes down in his book that Ola now owes hime 50 dollars. Next year they can meet say in London and Ola can pay John the 50 dollars or whatever debt he has accrued over the year. This is my understanding of the system. Do you view it different? I don't know what a block transfer is? Sorry I am not good with english financial terminology. I am in fact at the moment spending time trying to understand how things work in normal financial systems. 4) "What I don't get is why a system of distributed mini-ledgers is better than a centralised one where each of the nodes has a mirror (Loro/Nostro) at a central server and just updates its own mirror with the central server consolidating all the mirrors just like true central banks do (NOT the US Fed) but most other countries' central banks do." I think I have already answered this in (1). But to repeat. To mirror a central server you need to trust that server. That is the business banks are in, being somebody people trust to not cheat them. Crypto currencies OTOH try to replace trust with a combination of cryptography and some method of reaching consensus between multiple participants. In Bitcoin that is through mining. In Ripple it is all the individual nodes processing transactions independently which essentially vote. Remember the key part of the security in Ripple is that nodes don't cooperate and coordinate. If nodes simply mirrored each other then they would not be independent. The idea I tried to get across in the video was how nodes don't need to be decent honest people for the system to work. That was my example with e.g. Wile E. Coyote and the Road Runner. They can both be dishonest. But as long as we know they at least don't collude, then it is safe to make them nodes participating in voting on transactions. Let me know if this made sense, and what needs more clarification. I'll consider making a follow up video to clarify various parts which is tricky to get.
Andrew Mash (8 months ago)
Lol. Yesssssss, star wars and crypto match made in heaven. Dude this was classic "Yoda doesn't trust dar Vader". Will blast it everywhere. Thx, and cheers to 2018!
jody jones (8 months ago)
when i make a paper wallet ripple do it requires 20 xrp to use it or can i just buy 10 xrp an it will still accept it in a cold wallet an also when i unload the wallet will the wallet keep 20 xrp
sirus312 (9 months ago)
damnn fine good explantation.
Juho Pequito (10 months ago)
Thanks for the great video! However, I still have some questions. Hopefully you can help me with my doubts. So, the banks act as nodes in the ripple network. They validate the transactions in a similar way than individuals in the bitcoin network. Did I understand correctly? What does this mean in practice? If I want to send money from Australia to the US by using ripple, how fast could funds be transferred and how much would transaction fees be? Could ripple be used in fast micro payments such as buying a beer at the supermarket? Or is its main focus in transferring funds internationally? If they use a closed blockchain, I wonder how do you run a consensus algorithm with 60 banks when incentives to cheat, front run, manipulate the market, and break the consensus rules even against the other parties are so high?
hubbabt (9 months ago)
and on top of that.. all the video editing alone is enough to drive anyone crazy..! What you are doing is really awesome!
Erik Engheim (9 months ago)
Thanks, it is a complicated field for sure ;-) I am trying to learn about the new kids on the block like IOTA and NEO. There is just so much more going on now than when I got into this.
hubbabt (9 months ago)
Erik i am impressed with the effort and information and help us understand this. I am a subscriber now !
Erik Engheim (9 months ago)
I will try to answer you questions to the best of my knowledge. I am not as up to date on ripple today as I used to be when I made the talk this video is based on. The ripple guys have changed focus a lot over the years. E.g. the systems that fascinated me about ripple initially was the rippling and trust networks. My understanding is that present day Ripple is de-emphasizing that aspect. They used to focused on individuals and transactions between individuals. Today I believe there are more strongly focused on building infrastructure for the banks to replace the ancient SWIFT and wire transfer systems we are suffering today. They have had some success with this having signed up over 60 banks and financial institutions. "So, the banks act as nodes in the ripple network." I believe so, but not exclusively. If you look at this recent Ripple news announcement, where they expand with 55 validator nodes: https://ripple.com/insights/xrp-ledger-decentralizes-expansion-55-validator-nodes/ The news mentions ISPs, Microsoft, CGI, MIT etc, so quite a variety. "They validate the transactions in a similar way than individuals in the bitcoin network. Did I understand correctly?" Yes some similarity, in that there is a block chain which you can in principle validate yourself just like Bitcoin. However the process which decides on which transactions to accept in the new block, is of course fundamentally different from Bitcoin, since there is no proof-of-work and mining going on. "What does this mean in practice? If I want to send money from Australia to the US by using ripple, how fast could funds be transferred and how much would transaction fees be?" That is almost instant, about 2 seconds if I remember correctly. So much faster than Bitcoin and mining based crypto currencies which require about an hour before you can certain the funds have come through securely. Transaction fees are miniscule. Remember Bitcoin transaction fees are going up so high because there are so many buyers and sellers, and the network can't process transactions very fast. This pushes up the transaction fees. Since Ripple does not have a problem processing high volume of transactions you don't get high transaction fees. However this is from a technological point of view. In practice, whether you can transfer money using Ripple will depend entirely on what bank connections you have. E.g. if they are using ripple or whether you have some other gateway available. If you look at the ripple home page you can see they have some systems called xCurrent, xRapid and xVia for handling payments through banks and companies. They also list the financial institutions supporting these. As I said earlier I am not very up to date on these developments. In the earlier Ripple I was interested in an describe in the video, you and me could transfer money between each other directly if we it was possible to find a path of trust lines from me to you. Sending money to you would then essentially mean that you would be able to get cash from a friend, who had another friend who had another friend etc who trusted me. But today the idea is to use some financial institution to do this. I don't think you have to care about whether there is Ripple in background performing the work. "Could ripple be used in fast micro payments such as buying a beer at the supermarket? Or is its main focus in transferring funds internationally?" Absolutely. That is what I personally view as the great potential. Bitcoin in its present form can't really support that very well, with its slow transactions and high fees. Ripple OTOH is very fast and cheap. So the technology is there but companies have to integrate Ripple solutions to make this work. Several years ago I tried advocating this at my consulting company which was making an app for buying subway tickets in Oslo, Norway. I kind of got a cold shoulder ;-) You have to be realistic about these things. It will take time. The financial industry and people dealing with money are extremely conservative. It is hard to get the to jump on new things. I think international money transfer is probably where Ripple will be used first, because it is a market waiting for disruption. Local payments will come later I think when people have learned that they can trust the technology. "If they use a closed blockchain, I wonder how do you run a consensus algorithm with 60 banks when incentives to cheat, front run, manipulate the market, and break the consensus rules even against the other parties are so high?" I think anyone can in principle can become a node. They are not some exclusive membership only club. The ripple algorithm as I describe it is not dependent on participants being honest. It just depends on the majority not cooperating. So you can safe guard the system by including nodes with diverging interests. Personally what makes me trust the system somewhat more than Bitcoin is that it is not very anonymous. It is quite transparent who is transferring money. Should somebody try to cheat, there will be records which the police can examine much easier than bitcoin. So for people wanting anonymity, Ripple is not great. That of course as pros and cons. Ripple is essentially like our present banking system with respect to anonymity. That of course has the benefit of not being attractive to criminals. To be accepted in to the mainstream I think that helps. Bitcoin is kind of tainted as the money for criminals and drug lords. I sound perhaps awfully negative towards Bitcoin, but I would not write it off. Anonymity (or pseudo anonymity as bitcoin offers) is attractive to many and Bitcoin has a strong first mover status, with a lot of mindshare, and services built around it. The most promising crypto currencies in my mind today are Bitcoin, Ripple, Etherium and Iota. I am still hoping to make a video about Ethereum and Iota when I got more time.
Oscar Fougeroux (10 months ago)
Nice video, it's really help full to understand the ripple concept. I still have a question about the validators. Who are they ? Is it computers from Ripple company who are keeping the ledger updated ? Thanks for your work
Erik Engheim (10 months ago)
Thanks for the complement, I always like to get feedback. Makes it feel more worthwhile to make these videos ;-) To answer your question, as far as I know validators will typically be ripple gateways. So the the people who let you buy or sell ripple in exchange for fiat currency will typically also be involved in the validation process. Things have developed quite a lot since I originally made this presentation. Ripple is not as involved with end users, as they are more involved with building the systems for which banks transfer money between each other. The SWIFT system they use today is horrible slow and expensive and so over 60 financial institutions to date have signed up with Ripple to build the backends which will allow the banks to exchange money through the ripple network. My speculation would be that every bank using Ripple this way will participate in the validation process. The benefits for the banks is that, by simply being a validator they don't have to give full trust and authority to one single entity as a centralized scheme would require.
brady nields (11 months ago)
Good video, looks like you've done your research. Money is just transferable credit.
Richard Weinsteiger (1 year ago)
what are the purpose of the coins and how will their value go up?
Erik Engheim (8 months ago)
1) Apart from recent days, I think XRP has tended to be a lot more stable. A lot of what we see now is speculative bubbles right, happening in anticipation that these technologies will end up being widely used. I can't predict the future, but I would suspect that once these crypto currencies get more widely used, there will be less incentive to speculate on them. 2) Conversions happen quite quickly, so even with the current high appreciation it might work fine. At least I can't remember more than a 1% movement while making a transaction even in the busiest periods. 3) You DON'T have to use XRP to as a bridge currency in Ripple. As far as I know you can exchange dollars for euros directly in the network. However each transaction requires a tiny amount of XRP. So there is always a small need for XRP. XRP is handy when you can't match up buyer and seller of currency directly. It makes it a lot easier to make exchanges between two exotic currencies. Finally, I agree with you that this is a challenge for crypto currencies in general. I think we need to find a solution for this volatility if crypto currencies are to go mainstream. Of course Ripple is in less need of this as you don't need to use XRP as bridge currency. Perhaps this will also eventually stabilize XRP because speculators will learn that if they push up the price to much then people making transaction will start using it less.
Luis Miguel (8 months ago)
Erik Engheim but if ripple is going up 100s of percent how would a transfer between two fiat currencies be stable using something that is appreciating so much? Please explain.
luke55x (9 months ago)
Yeah it works for me too. But I'd like to get more papers like that and I also couldn't really find any more papers besides News and Press reports. Because the link refers to ripple.com/files...so i thought there is maybe a section where you can find all that files. Maybe someone got a solution here. Anyway I think I'm just asking the ripple support as well. Still if anyone has a clue, I'd appreciate it.
Erik Engheim (9 months ago)
The ripple solutions guide link from Steven Slocum worked for me. I can't remember finding anything quite like the Bitcoin whitepaper.
luke55x (9 months ago)
Hey can you tell me where to find the white paper, I got problems finding it on the ripple website? Thanks I 'd really appreciate it if you can help me

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