With decentralized networks, every user has control over the network. In Bitcoin, by running a Bitcoin node you’re verifying and passing transactions around. That doesn’t apply to distributed networks like Ripple – the few “validators” are in total control over the network and creates “consensus” (of 5 servers, run by OpenCoin Inc and OpenCoin Inc partners).
But wait – you can become your own validator! First of all, the source code isn’t even out yet. Secondly, the consensus system ensures there is only one ledger – the most accepted one. If you run your own validator, you must connect with OpenCoin Inc servers, or you will be building a different ledger. In practice, it is not possible to “dethrone” OpenCoin Inc as you have to co-operate with OpenCoin Inc.
RippleScam.org aims to educate people about what Ripple is. Because if people truly knows what Ripple is, nobody would use it.
There’s more problems with Ripple™ than just that. For one, it doesn’t let you send money. It lets you send tokens printed arbitrarily at the whim of gateways (banks, but more of OpenCoin Inc doublespeak to try and get users embracing a centralized payment network).
That can’t right.. but it is.
When you have a centralized network, you have a centralized point of failure. Even if assuming parties are 100% honest, there’s a shockingly easy way to fail…
It gets worse in two ways. First of all, Ripple values all IOUs (tokens) the same. If you trust multiple “gateways”, the Ripple client treats both gateways as equal – as a band-aid to get the Ripple network functional. You automatically become a “liquidity provider”, which means that you will automatically trade tokens of one type for another, 1:1, with no fee. You take on significant risk for no gain.
Gateways don’t do this because they run their own validators, they run their own rippled. OpenCoin Inc employees runs their own rippled. They configured Ripple so that they’re not a liquidity provider – why would you want to take on risk without gain? Only users of Ripple will lose. This is a “major feature”. Just don’t look at our issues tracker.
TAKING AWAY YOUR CONTROL
Ripple includes various features such as a fee that can be levied by “gateways” (banks) on your “money” (tokens). For example, if you trade a BitStamp token between users (completely unrelated to BitStamp), a 0.2% fee is levied.
That’s like Bank of America charging you when you pay a friend with cash you withdrew from an ATM. How is this possible? Because OpenCoin Inc & partners are in control of the Ripple network, and your transaction will be rejected if it does not include the ‘appropriate’ 0.2% fee to BitStamp.
HOW IS IT SCAM?
scam: /skam/ noun 1. a dishonest scheme; a fraud.
OpenCoin Inc dishonestly markets and presents Ripple as something that it isn’t. OpenCoin Inc advertised Ripple as “open source” when there was no source released (and there still isn’t!). OpenCoin Inc advertises Ripple as open – that no one owns it, despite the ironic fact that they own the trademark for Ripple.
OpenCoin Inc premined all of the XRPs (Ripples) in existence, and their business model is tricking people into using the Ripple network (you must buy XRPs to use any part of Ripple), playing Federal Reserve, and making money off XRP speculation. That’s directly OpenCoin Inc’s business model.