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Is Ripple a scam, as claimed by a website and forum thread?
Is Ripple a scam?
Answers
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Time will tell.
There are two main accusations against Ripple:
it claims to be open and decentralised, but currently it isn't, since the server is closed source and controlled exclusively by Ripple owners (OpenCoin)
it came with a lot of preminted coins, some of which are supposed to be distributed freely, while others are to be kept by Ripple developers and owners (as a payment for the effort)
You may like or not point 2, but that is definitely not a scammy fact, since it's not a secret: as long as they actually do distribute those coins, that is fine.
Point 1 is more crucial: it is widely considered bad to promote something as open when it isn't. Same goes with promoting something as decentralised when it isn't either. Claiming "it will be" quite obviously isn't enough. Once they will eventually release the server sources, their credibility will likely be restored and those accusations should likely stop.
2 The server code seems to have now been released: https://github.com/ripple/rippled
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Here's the short answer: no, Ripple is not a scam.
However, there are lots of Bitcoin enthusiasts that believe that Ripple is a competitor to Bitcoin.
Many of the claims in forums and on websites are false.
For example, ripplescam.org says:
Ripple is not open source. No server source code has being released, with the paid developers behind Ripple admitting that it is to prevent others from using building something better than Ripple in true open source fashion.
The source code for the client has already been released; the server code is expected soon.
Every single Ripple nodes is controlled by a private for profit company. It is centralized, like a bank or PayPal. Not a decentralized currency.
Also not true. Anyone can run a Ripple gateway.
I could go on, but you get the picture.
Here's the deal: some Bitcoin people see Ripple as a competitor. Actually, Ripple is complimentary to Bitcoin. Since Ripple is an open payment network, you can use any currency you want, including Bitcoin. In fact, I expect that, if Ripple takes off, Ripple will be the easiest way to exchange Bitcoin for dollars, euros, etc.
3Since the source code has now been released, your answer is currently the best here. Perhaps you could update your answer with the fact that the source code is now available? – Murch – 2013-11-04T09:19:55.253
Well, "Anyone can run a Ripple gateway", but if that gateway is not trusted by other gateways, it's like it doesn't exist. – o0'. – 2014-10-08T07:32:11.330
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No Ripple is not a scam. It's a product, [BASED UPON] open sourced project and an attempt to resolve some cryptocurrency to fiat concerns we have in the existing exchange model. I like to think of Ripple as a meta-currency designed to enhance existing currencies.
There appears to be a campaign on bitcointalk to discredit ripple including some forum members claiming they offered money to claim ripple is a scam. Also ripple has a close relationship with Google, which makes some people uncomfortable. However, nothing about the service or the people working on the service indicate a scam.
Do you have sources on Ripple's relationship with Google?? – Steven Roose – 2013-05-24T17:10:32.240
1http://gigaom.com/2013/05/14/google-ventures-invests-in-opencoin-the-firm-behind-bitcoin-exchange-ripple/ – Charles Hoskinson – 2013-05-24T17:24:15.083
Lot more to come in the near future – Charles Hoskinson – 2013-05-24T17:24:55.713
-1 only because it states that it is open source, while it is not (yet?). – o0'. – 2013-05-24T17:41:04.127
Seriously? They based the technology on opencoin which is open sourced. http://opencoin.org/
I don't care what they "based" it on, server sources are still closed. Actually the server binary itself isn't distributed, so it's totally centralised for now. – o0'. – 2013-05-24T18:42:23.477
Couldn't you have simply edited my post then? – Charles Hoskinson – 2013-05-24T18:44:23.247
2Google Ventures invested in Opencoin and bought the dev team cupcakes. – David Schwartz – 2013-05-24T19:55:28.490
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Also not true. Anyone can run a Ripple gateway.
A couple problems here.
- The wrong page was linked, I'm pretty sure the intended page has something to do with setting up gateways
- As it says there, setting up a gateway requires setting up a server (rippled), for which there is no code available, and as it says here, no binaries either. So the only way to set up a gateway at this point in time is to get a copy of the server from OpenCoin via some non-public channel.
In short, until a server is made publicly available in binary or source form, they have made no move beyond talk that indicates a desire to make ripple decentralized.
Does that make them a scam, no. Does that decrease their credibility, yes.
2 You can set up a gateway without having a ripple server: http://bitcoin.stackexchange.com/questions/10489/how-to-create-a-ripple-gateway
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It depends how you define "scam". IMO, it is not more of a scam than the fractional reserve system, used in the economy worldwide for like a century already.
They take your bitcoins and multiply them using a fractional reserve system, holding the actual coins, and giving you IOUs instead. It is an old idea and different kind of bank-like institutions have been doing it, even with gold, since basically forever.
This allows for an existence of more money then there originally was - which might be a good thing, or might be a bad thing, depending on how good an inflation is to you... But either way, it surely cannot end well.
3Who is the "they" you are talking about in the second paragraph? – David Schwartz – 2013-05-24T16:58:09.807
1Whoever creates these XRPs – Gigi – 2013-05-24T17:42:59.083
2Whoever creates XRPs multiplies Bitcoins? That doesn't make any sense. – David Schwartz – 2013-05-24T19:53:22.170
If only a chief cryptographer from a certain company would record a lecture to resolve all this community confusion..... – Charles Hoskinson – 2013-05-24T20:33:02.267
It doesn't make any sense that a bank multiplies money whenever they issue an IOU? Well... then obviously it must be a scam :) – Gigi – 2013-05-26T15:12:24.483
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It's very simple: If you were not given any of 10 billions XRP - for you it's scam. If you were given free ripples - you are evangelist of the scam.
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To activate your wallet you need to pay - you have to buy ripples, even if you don't need them. All ripples are owned by opencoin. Pure scam. To tell you more - here's my story: I invested one bitcoin to check how it works. I sold this bitcon on bitstamp for 130$. Then I use option to withdraw $$ to my ripple wallet (I had to fund my wallet to activate it). But my $$ were converted to 5500 ripples. I wanted to buy BTC back. But for my ripples I was able to buy only 0,65 bitcoin. I had to leave some ripples so my wallet is active. By the end of the day I lost 45$.
2This isn't an answer. It's just a story about clueless trading. It's like someone new to bitcoin bought some on MtGox and immediately sold it back and claims "I just lost money, MtGox is a scam!". – dchapes – 2013-05-26T00:40:37.260
No, it's not. You're missing the most important point - obligatory XRP buyout. I didn't event want to buy any XRPs. Second - you don't see the rate at which your money will be converted. Please show me, if it's there. – elis – 2013-05-26T07:55:45.933
2The single one fact that makes people claim Ripple is a scam is that their inventors keep 20% of the total currency for themselves. This is rather controversial when compared to Bitcoin where all currency is created by miners, starting from 0. – Steven Roose – 2013-05-24T17:12:38.307
Closing this question as it is not a good fit for StackExchange. It (as is now obvious from the answers) leads to a lot of personal opinions rather than facts. People have different ideas of what the word "scam" means and so on. – D.H. - bitcoin.se – 2013-05-27T15:50:59.157
1The source code for the Ripple server has meanwhile been made publicly available, dismantling most of the arguments brought forth by ripplescam.org. – Murch – 2013-11-04T09:17:33.103