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Author Topic: A ripple-like network for bitcoin? (brainstorming)  (Read 7878 times)

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Offline timeofmindTopic starter

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A ripple-like network for bitcoin? (brainstorming)
« on: May 15, 2013, 06:36:50 PM »

Since ripple will allow us to exchange currencies, through their "trust" network, this sounds like something bitcoin needs, but I would not want to use one where the unit backing it is being given out by a central authority, which is also hoarding them. Is it possible to build a ripple-like network on top of bitcoin? Allowing us to develop "circle-of-trust" networks between bitcoin addresses for certain designated currencies? and use the bitcoin network as the fundamental medium of exchange, rather than the ripple. I guess something like this: http://www.bitcoinx.org/, but also, the circle of trust features added, so that a group of coins could be designated to a specific currency denomination based on decentralized pricing mechanism... ie asking and selling prices submitted, but then, we need the circle-of-trust component to also ensure that people do not game the system of course, and then designate outrageous values to various currencies, relative to other ones.
« Last Edit: May 15, 2013, 07:25:22 PM by timeofmind, Reason: clarify topic of post »


Offline timeofmindTopic starter

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Re: A ripple-like network for bitcoin?
« Reply #1 on: May 15, 2013, 06:39:57 PM »
What ripple achieves, in fact, is a way to determine what the true value of its currency is, by turning the entire network into a decentralized exchange. This would benefit bitcoin greatly by making bitcoin exchanges less vulnerable, and bitcoin market more liquid.

Offline timeofmindTopic starter

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Re: A ripple-like network for bitcoin?
« Reply #2 on: May 15, 2013, 06:44:40 PM »
would it be best to extend the bitcoin protocol, or to use a seperate protocol for such a decentralized exchange network? individual bitcoin clients could include the ability to also use the bitcoin-exchange protocol, or also, seperate bitcoin exchange clients could be built that only view the bitcoin-exchange network, but can obviously not spend bitcoin to receive dollars, etc. A client could have the bitcoin exchange protocol turned off, or flag swtiched off at compile time, to have bitcoin-exchange functionality included in the client or not.

Offline timeofmindTopic starter

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Re: A ripple-like network for bitcoin?
« Reply #3 on: May 15, 2013, 06:47:47 PM »
I guess the most difficult part, and the reason ripple may be more capable at setting this up, is the ability to setup reliable distributors of physical cash on the network... ie. places you can go to pickup the cash you are owed.... we would need a way to create incentive to keep such distributors honest

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Re: A ripple-like network for bitcoin?
« Reply #4 on: May 15, 2013, 07:04:52 PM »
somebody purchases some bitcoins for cash to the bitcoin-exchange network who has enough "line-of-credit" to vouch for the dollar amount. bitcoins are delivered by somebody else who wants dollars... this person does not need a line-of-credit for bitcoins, simply needs to possess them, and in return gets those dollars from the network, in the form of credit owed to him, that can be claimed from a dollar distribution sources that is linked into this network through the "network-of-trust". If someone is owed dollars by the network, and distribution source does not give him the dollars that the network owes him.... then what? ah! I know the answer, the distributor must first develop a "line-of-credit" with that specific person collecting... ie. the person must establish trust with a certain entity in his location before he engages in the transaction.

OK. So you may ask... what then is the point? Doesn't this make the entire network completely redundant? Person could just deal directly with the local bitcoin->currency dealer, right? But no! In fact this would be extremely important for price-setting bitcoin, while not requiring a central price-setter. This whole "network-of-trust" system, what it achieves is a way for bitcoin to be "aware" of what people are exchanging bitcoin for in other currencies, without the ability for anyone to "game" the system. ie. it allows decentralized exchanges to operate that can depend on the entire network for accurate price of what everyone else on the network is exchanging bitcoin for.

Offline timeofmindTopic starter

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Re: A ripple-like network for bitcoin?
« Reply #5 on: May 15, 2013, 07:21:59 PM »
You see, this BitCoinX protocol, I can't imagine how it would work alone, because the exchange needs away to verify that people are actually exchanging the tangible assets that they say they are. With a ripple-like network on top of bitcoin, we could achieve this, and this would be an incredible boon to bitcoin, because suddenly we would be able to price bitcoins very accurately, and in a way that would not be vulnerable to DDOS or other attacks of specific exchanges.

Offline timeofmindTopic starter

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Re: A ripple-like network for bitcoin? (brainstorming)
« Reply #6 on: May 15, 2013, 07:34:56 PM »
To clarify, without a trust-based network, anyone could come on to such an exchange and make any offers they want, without any intention of satisfying them. "Trust" is the only way to link tangible assets to digital assets, and by implementing a network-of-trust, such as ripple is doing, we can make this connection between bitcoin and physical assets in a decentralized way. Anyone will be able to establish lines of credits for any currency/physical asset they agree to, and then suddenly, those physical assets can be traded for digital assets within this network, wherever the physical facilities exist to connect the tangible with the digital. In fact, as part of this protocol, we could also establish well-known physical "protocols" in order to make this system rock solid; so that when a person signs up with a local distributor of physical assets, he establishes a line of trust with that local physical entity through a generic legal contract.

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Re: A ripple-like network for bitcoin? (brainstorming)
« Reply #7 on: May 15, 2013, 07:38:14 PM »
In other words, at the point of distribution of physical assets, a physical contract will then be translated into a digital contract understood by the bitcoin-exchange protocol, so that the physical distributor is now trusted to distribute the given amount to the certain individual in possession of a specific bitcoin address, which he then uses to buy physical assets from the network.

Offline timeofmindTopic starter

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Re: A ripple-like network for bitcoin? (brainstorming)
« Reply #8 on: May 15, 2013, 07:42:18 PM »
An important part of this, remember, is that the person is not buying directly from that specific distributor he forms the legal contract with, because, in fact, that distributor would likely not give him the best price of dollars for his bitcoins if this were to happen. He instead, buys his dollars from the entire network; which gives him the best price possible; and then the distributor delivers these dollars on the network's behalf.

Offline timeofmindTopic starter

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Re: A ripple-like network for bitcoin? (brainstorming)
« Reply #9 on: May 15, 2013, 07:45:36 PM »
So, lowest price always wins. Between dollars and bitcoins, lowest price for bitcoins, always meets lowest price for dollars, and always people asking the most reasonable prices have their transactions filled first by the network, then people on receiving end of physical transactions can continue to use their digital representation of the physical asset to do more trades, or to go to local distributor to cash out.

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Re: A ripple-like network for bitcoin? (brainstorming)
« Reply #10 on: May 16, 2013, 04:15:32 PM »
I guess in ripple speak distributor = gateway, any entity advertising its services to exchange base currency, bitcoin in this case, for other currencies.


 

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