Are all ripples worth the same amount? Is value specific to each gateway?

-2

Are all XRPs worth the same amount, regardless of each gateway you use them at?

Suppose I have one gateway who is un trustworthy, or will depreciate in value.
Suppose I also have a gateway that is backed by vaults of gold and a fixed number of XRP Finally suppose I have a gateway with an equal amount of gold, but a growing number of XRP (diluting share value).

Question

How does the value of XRP normalize across the markets?
Is this normalization part of a vetting process done by OpenCoin, to ensure quality gateways?
What happens to a gateway that has more XRP than gold it has? .. or becomes a bad actor who is untrustworthy (Madoff)?

goodguys_activate

Posted 2013-10-17T22:33:00.973

Reputation: 11 898

XRPs are internal to Ripple and have nothing to do with any value at any gateway or anything outside of Ripple (other than that people are willing to trade them for gateway balances). So your question doesn't make much sense as written (e.g. a gateway dealing in gold likely wouldn't touch XRP and would just issue XAU (the ISO code for gold) and would have nothing to do with any XAU:XRP markets/offers that may or may not form. – dchapes – 2013-10-17T22:55:36.243

1-1, because you are asking a completely different question in the title than the ones you ask in the body of your question, which are built on an assumed incorrect answer to your title question. – Murch – 2013-10-18T00:37:30.643

Answers

XRP is the base unit in Ripple. From Ripple's viewpoint, it doesn't have value, other things have value measured in it.

XRP is also the only thing in Ripple that actually exists and isn't just an IOU. As such it has nothing to do with gateways, trust or bad acting, and it definitely doesn't imply any gold backing. You can have XRP in your wallet and they are what they are, and they are fungible with each other.

On the other hand, a BTC IOU from a gateway might be worth more or less (measured in XRP) depending on how trustworthy the gateway is. But there is no built-in mechanism in Ripple to equalize the market, it's all about market forces and arbitrage bots that correct any unjustified gaps. Of course, these use Ripple's pathfinding and order matching functionality.

Meni Rosenfeld

Posted 2013-10-17T22:33:00.973

Reputation: 18 542

XRP are not issued by gateways, they are fungible in the Ripple Protocol, much like Bitcoins in the Bitcoin Protocol.

All other currencies in Ripple are issued as IOUs by gateways. Should the gateway fail, its IOUs would become worthless.

A gateway would probably not be backed with gold, but rather with the deposits of its users. A user would send an amount to the gateway's bank account, say $10, and in recompensation receive an IOU with $10 value.

What mixture of currencies a gateway holds is irrelevant for its trustworthiness.

Murch

Posted 2013-10-17T22:33:00.973

Reputation: 41 609