Cryptocurrency company Ripple says SEC lawsuit is imminent • Hacker News Board

Re: Cryptocurrency company Ripple says SEC lawsuit is imminent

#151

Post by HexagonalKitten » Tue, Dec 22, 2020, 6:14 PM UTC

jl2718 wrote: post #89

garmaine wrote: post #46

Earlier quoted context omitted.

No, that was the idea of Ripple, invented by Ryan Fugger long before bitcoin even existed, and requires no new coin or token for its operation. OpenCoin, a company founded by Jed McCaleb, bought the trademarks other IP for Ripple and rebranded their bitcoin competitor altcoin as XRP. They never had any interest in the original concept, and quickly threw it away when it was no longer fashionable.

I don’t remember if I had ever talked to Ryan, but I remember talking to people about this in forums and in person at Stanford and Cal in 2007. By 2005, the financial system was showing signs it was headed toward a point of no return because there was no revenue basis to justify the debt leverage, and the only way out was either extreme dollar scarcity, or previously unthinkable monetary base injections. Either way,…

> Most ripple believers thought that central currency was basically antithetical, although one based on unskilled labor hours might be acceptable as fallback.

This stuff always sounded like it came from people who've never hired. Unskilled labor is not all equal.

> Satoshi’s concept was to use hashcash to both secure the ledger and issue currency. This was brilliant but antithetical to the no-currency concept, and re-ignited the debate

Satoshi's most important advancement was in making a currency and using it as its own rate-limiter by paying, in it, to publish.

Bitcoin's weakness is that computation isn't priced in BTC, so scripts had to be nerfed. Vitalik applied Satoshi's rate-limiting solution to computation and Ethereum scripts can now be allowed to grow arbitrarily complex.

Re: Cryptocurrency company Ripple says SEC lawsuit is imminent

#152

Post by bt3 » Tue, Dec 22, 2020, 6:22 PM UTC

HexagonalKitten wrote: post #147

bt3 wrote: post #119

Earlier quoted context omitted.

I could be wrong, but I always understood the primary purpose of XRP as a mechanism to increase liquidity. Since Ripple is all about cross-border payments, you're potentially dealing with hundreds of currencies. So if you were a bank that needed to do global business, you'd be required to hold a subset of each traded currency in nostro/ vostro accounts. XRP was then meant to be the "standardized" currency that member…

I don't see how adding a currency makes this easier. Even if I don't want the currency you have, I want XRP less.

Adding a currency that everyone can agree upon as the "intermediary" prevents you from needing to hold huge sums of random currencies. For example - you're a bank in the UK so your fiat currency is GBP. If you want to manage transactions within just Europe, you would need to have Euros, Croatian Kunas, Danish Krones, Swiss francs, Polish zloty's, Russian rubles, Turkish liras, etc. Therefore you as a bank are subject to the ongoing valuations of these currencies, not to mention you've got hundred of thousands of (insert currency here) tied up in these accounts. As a bank, you have to correct for this inefficiency so you produce conversation rates that are not consumer friendly, but necessary to recoup the money you've lost setting aside all those accounts.

With XRP, you replace all those currencies with some amount of XRP. Because all member-banks use XRP when you need to transaction, say GBP to EUR (simple example), you would take your GBP, convert it to XRP, then use that XRP to buy EUR from another bank, that bank then can hold the XRP or chose to immediately convert it back to EUR through other banks. Like I mentioned previously, that whole transaction takes a few seconds, so you're effectively not subject to market volatility that could impact the transaction itself.

Re: Cryptocurrency company Ripple says SEC lawsuit is imminent

#153

Post by bt3 » Tue, Dec 22, 2020, 6:25 PM UTC

arcticbull wrote: post #150

bt3 wrote: post #119

Earlier quoted context omitted.

I could be wrong, but I always understood the primary purpose of XRP as a mechanism to increase liquidity. Since Ripple is all about cross-border payments, you're potentially dealing with hundreds of currencies. So if you were a bank that needed to do global business, you'd be required to hold a subset of each traded currency in nostro/ vostro accounts. XRP was then meant to be the "standardized" currency that member…

Currency roughly speaking doesn't move across borders, correspondent banks in each country have a ledger, you send money by decrementing the ledger on the send side and incrementing it on the receiver side. Someone else does the opposite. The exchange rate is set such that the ledger balance tends around 0. No new currency needed.

I have no experience here, so I understand this in theory, but in practice, banks would somewhat indefinitely have some digital sum of a range of currencies in which they may not wish to have exposure to. How do you solve for that as a bank?

Re: Cryptocurrency company Ripple says SEC lawsuit is imminent

#154

Post by HexagonalKitten » Tue, Dec 22, 2020, 6:25 PM UTC

Espressosaurus wrote: post #93

zapdrive wrote: post #82

Earlier quoted context omitted.

Of course, because it's a CENTRALIZED service. I can make a centralized transaction settlement service with a completion time in milliseconds. But it will not have the security and freedom of a decentralized service.

The security of having an audit trail with no way of reversing the transaction and the freedom to get ripped off by a shady exchange?

If I send you a signed message from a trusted key, your "audit trail" is to save that message. Super simple. And if I have a message ID in each you could even show that there aren't any missed messages, if you wanted.

A blockchain is just an incredibly inefficient way to store those messages, giving them an explicit ordering in case they don't have internal IDs, and to establish ordering between users. All of that can be done with a simple 'index server' that doles out ordered message IDs, without the blocks, the mining, etc.

Banks don't even need the currency. Banks just settle their debts in their local currency and they trust enforcement to the courts and bailiffs. This is what Ripple had right, in the beginning. They only need a messaging layer.

Re: Cryptocurrency company Ripple says SEC lawsuit is imminent

#155

Post by SAI_Peregrinus » Tue, Dec 22, 2020, 6:28 PM UTC

lifty wrote: post #139

hanniabu wrote: post #112

Earlier quoted context omitted.

The nodes violate money transmittal laws

What is the core argument for this position?

If I were to guess: The SEC considers Bitcoin to be a currency. Intermediaries handling currency transactions are subject to "Know Your Customer" laws, and need to get various identifying information from the parties whose currency they're transmitting. Lightning network nodes don't collect such information. Therefore, the Lightning network node operators are in violation of US law.

I'm no expert though, there may be other SEC rules that are more relevant.

Re: Cryptocurrency company Ripple says SEC lawsuit is imminent

#156

Post by HexagonalKitten » Tue, Dec 22, 2020, 6:45 PM UTC

bt3 wrote: post #152

HexagonalKitten wrote: post #147

Earlier quoted context omitted.

I don't see how adding a currency makes this easier. Even if I don't want the currency you have, I want XRP less.

Adding a currency that everyone can agree upon as the "intermediary" prevents you from needing to hold huge sums of random currencies. For example - you're a bank in the UK so your fiat currency is GBP. If you want to manage transactions within just Europe, you would need to have Euros, Croatian Kunas, Danish Krones, Swiss francs, Polish zloty's, Russian rubles, Turkish liras, etc. Therefore you as a bank are subject…

> you would take your GBP, convert it to XRP, then use that XRP to buy EUR from another bank

But I could more easily just use my GBP to directly buy Euros, with one less exchange rate and one less transaction in the process.

> that whole transaction takes a few seconds

For a bank, that's slow. But even if it wasn't, using an intermediate currency simply takes twice as long for each step.

Re: Cryptocurrency company Ripple says SEC lawsuit is imminent

#157

Post by SlipperySlope » Tue, Dec 22, 2020, 6:48 PM UTC

Back in 2015 FinCEN (US Financial Crimes Enforcement Network) issued guidance that an administrator of a digital virtual currency had to be a Money Services Business and file Suspicious Activity Reports, perform Know Your Customer and comply with Anti-Money Laundering regulations.

So Ripple filed and became an MSB in the 50 US States. So far so good.

But Crypto is more than a payment method. Obviously it is purchased in hopes of capital appreciation and that makes it a Security.

Accordingly, Ripple should have filed a S-1 security disclosure application with the SEC BEFORE issuing XRP.

Failure to register XRP as a security should lead to big fines.

So why does the US SEC leave Bitcoin and Ethereum alone?

Because there is no central administrator that issues and redeems the tokens.

Ideally, crypto tokens should file with the US SEC and their exchanges should be MSBs.

Re: Cryptocurrency company Ripple says SEC lawsuit is imminent

#158

Post by dmix » Tue, Dec 22, 2020, 7:03 PM UTC

loceng wrote: post #125

bitxbitxbitcoin wrote: post #116

Earlier quoted context omitted.

The freedom to get ripped off by a shady exchange is the same as the freedom to not have your money stolen by the government. Worth it, in my opinion.

Except you can, through effort and organization (none of this "trustless" mantra non-sense/propaganda), get in place a competent democratically elected government with integrity via accountability and oversight - perhaps even running for elected positions yourself if you're passionate and strong enough. Or you can ignore the nuances and complexes, say fuck it, and support a system that disables power that good organi…

Normal people don't run for political office. Not from any of my life experience.

Re: Cryptocurrency company Ripple says SEC lawsuit is imminent

#159

Post by bt3 » Tue, Dec 22, 2020, 7:15 PM UTC

HexagonalKitten wrote: post #156

bt3 wrote: post #152

Earlier quoted context omitted.

Adding a currency that everyone can agree upon as the "intermediary" prevents you from needing to hold huge sums of random currencies. For example - you're a bank in the UK so your fiat currency is GBP. If you want to manage transactions within just Europe, you would need to have Euros, Croatian Kunas, Danish Krones, Swiss francs, Polish zloty's, Russian rubles, Turkish liras, etc. Therefore you as a bank are subject…

> you would take your GBP, convert it to XRP, then use that XRP to buy EUR from another bank But I could more easily just use my GBP to directly buy Euros, with one less exchange rate and one less transaction in the process. > that whole transaction takes a few seconds For a bank, that's slow. But even if it wasn't, using an intermediate currency simply takes twice as long for each step.

> But I could more easily just use my GBP to directly buy Euros, with one less exchange rate and one less transaction in the process.

In this scenario, the transacting bank would need to have (or want) to have GBP for them to sell Euros. While I agree this is a poor example, think of the more obscure conversions. Swedish kronas to South African rands, etc.

Anyway, I won't pretend XRP is a perfect solution. Just seems to me that it solves the edge cases of liquidity while doing so more cost effectively, which in turn benefits the consumer.

Re: Cryptocurrency company Ripple says SEC lawsuit is imminent

#160

Post by DennisP » Tue, Dec 22, 2020, 7:50 PM UTC

bt3 wrote: post #159

HexagonalKitten wrote: post #156

Earlier quoted context omitted.

> you would take your GBP, convert it to XRP, then use that XRP to buy EUR from another bank But I could more easily just use my GBP to directly buy Euros, with one less exchange rate and one less transaction in the process. > that whole transaction takes a few seconds For a bank, that's slow. But even if it wasn't, using an intermediate currency simply takes twice as long for each step.

> But I could more easily just use my GBP to directly buy Euros, with one less exchange rate and one less transaction in the process. In this scenario, the transacting bank would need to have (or want) to have GBP for them to sell Euros. While I agree this is a poor example, think of the more obscure conversions. Swedish kronas to South African rands, etc. Anyway, I won't pretend XRP is a perfect solution. Just seems…

Why wouldn't the bank just use dollars or Euros as the intermediate currency? Have a pile of dollars, a trading pair for everything against the dollar, and you're all set.