Ripple: An Online LETS System
An announcememt from Steve Carson (no relation, so far as I know), by email.
Due to the incredible work of Ryan Fugger with a tiny contribution from myself www.ripplepay.com has now been launched. Ripple is an online peer to peer credit/currency scheme.
He links to this explanation from the Ripple site:
Steve adds:
Due to the incredible work of Ryan Fugger with a tiny contribution from myself www.ripplepay.com has now been launched. Ripple is an online peer to peer credit/currency scheme.
He links to this explanation from the Ripple site:
Ripple is a monetary system that makes simple obligations between friends as useful for making payments as regular money.
Normally, if your friend Alice owed you $10, she would have to pay you back before you could make any use of that debt. If you were creative, however, you might be able to pass the debt on to someone else who knew and trusted Alice, in exchange for something you wanted. For example, you might be able to get a book you want from Bob, who also knows Alice, in exchange for letting Alice know that she now owes Bob $10. Instead of money, you used Alice's IOU to pay Bob. Alice acts as an intermediary between you and Bob.
Ripple does the same thing, only it takes the idea one step further. What happens if you want to get a haircut from Carol, who doesn't know Alice at all? Your $10 IOU from Alice isn't useful because Carol being owed money by Alice doesn't mean anything to Carol. But suppose you had a way to find out that Bob, who knows Alice, also knows Carol. You could talk to Bob and arrange for him to take Alice's IOU in exchange for giving his own IOU for $10 to Carol. Since Alice owes him exactly what he owes Carol, Bob is even on the deal. Both Alice and Bob act as intermediaries between you and Carol.
And that's how Ripple works. You create a profile on the system and indicate who you know and how much you trust them by connecting to people by email address and giving them credit limits. Then whenever you want to make a payment to another Ripple user using only friendly obligations, the system finds a chain of intermediaries connecting you to the person you want to pay, and records the payment in each intermediary's account all the way down the chain. You end up owing one of your "neighbours" on the system, and the payment recipient ends up being owed by one of her neighbours.
Steve adds:
The system is ready to use. You can create credit and pay your obligations. We are launching it first to community currency/monetary reform activists and other interested parties. We would be grateful for any feedback that will be helpful in improving the system. Once we have acted on any feedback we shall proceed with a public launch.
Please register, check it out and forward this email to anybody else who may be interested:
www.ripplepay.com
posted by Kevin Carson | 7:38 PM
14 Comments:
This sounds like some crazy lefty idea. I'll take Galt's Gulch any day.
This seems like a lot of work when it's really not that tough to get a credit card.
- Josh, pays off every month
Thanks, jeremy. That's my reaction, too.
Stefan: Actually, the credit for the idea probably goes to Eric Frank Russell, in "And Then There Were None." The story's online, if you Google it.
Josh: This system is more like barter than conventional credit. And the problem with credit cards is, once you accumulate any debt at all, it's about like signing up for the Army. Your ass belongs to them until THEY say they're done with you. And once you're in debt to them, the interest rate, fees, and every other rule is whatever THEY say it is. They will deliberately raise the interest rate, jack up the late fees as high as possible, keep chipping away at the interval between when you get the statement and when it's due--and then whine about "deadbeats" filing Chapter 7. Damn straight it's not hard to get a credit card; as the heroin dealers say, the first one's free.
It's actually surprisingly easy to manipulate the credit card companies, to play them off one another, to get fees waved, even to get rates lowered. I'm shocked when I hear that people pile up untold debts on credit cards and suffer the cuts of a thousand fees and 30% rates.
- Josh, current credit card debt: $41
I didn't recognise the Russell story until I googled it - published in the UK as part of "The Great Explosion". I posted an extract here as part of a series of posts on Libertarian fiction.
I always enjoyed Russell's work - he has the right attitude to 'authority'!
I accidentally found the Agatha Christie novel on sparknotes.com first. The first question I had when reading the summary was why the guests didn't just sleep together and take watches in pairs. My second one was why the villain would go to the trouble of arranging all the elaborate mysterious deaths and then leaving a note in a bottle explaining everything.
I think I'll read the Russel story next. By the way, just kidding about Galt's Gulch, I'm not very keen on paying my friends a cent every time I borrow a hammer.
I've already pointed out on this blog that if you use credit cards, you end up externalising the running costs onto all transactions including cash transactions. Their fee structure is deliberately set up that way.
The Eric Frank Russell novella "And then there were none" was slightly edited for continuity and ended up the third segment of a booj, "The Great Explosion". One of the anarchis sites has the entire novel available on line - google for it.
Once you've read it, think about the chief bureaucrat's final report on what allows their "ob" system to keep working - comparatively few shortages of resources.
I don't like the way you're being auto-set-up for debt once you've said you trust someone. If someone down the chain defaults on their debts, who pays? Is it the person closest to them in the chain, or someone else - spread over the chain?
Where is the incentive to say you trust someone and are willing to take the hit for them if they default?
It was the memory hole that had Eric Frank Russell's "The Great Explosion".
/books/tgetoc.html
Zopa in the UK seems like a slightly different take on the idea.
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(my previous comment, minus a response to what solan wrote...I was wrong)
The Ripplepay site is down, so I can't see exactly how it works, but here are my thoughts.
1) This is great!
2) I think the monetary system will only get off the ground if it is explicitly tied to a market (an Ebay-like system). I can only use this system to buy a rather specific selection of goods (those being sold by members who trust my credit sources), so I need a quick way of finding those particular goods.
2b) I think this type of system could be used for "massively multiplayer online role playing games" (MMORPG--or whatever they're called). Many of these games have intricate economies, and generally have a built-in currency. However, there is also a real-world market for the in-game items, so a system built in and around a game could grow into the real world.
3) It seems like you can only participate if you've got something to sell online--otherwise, you're really just using $ but wasting your time with this intermediate. All my income comes from my job and I'm not interested in selling stuff on-line. I think the only way that I could earn this type of currency is if I provide some sort of public service and accept this currency for donations.
Ripplepay is still down, but I've been thinking more about what Solan wrote. I can think of two ways around the problem
1) Allow a person to get some credit for exchanging another person's IOU for his own (i.e., not a 1 to 1 exchange)
2) Allow people to set a target level for the IOU ammounts that they have in their account. For example, I may say that I want to keep $10 worth of Kevin's IOUs around at any time, and I am willing to trade my IOUs for Kevin's IOUs in a 1 to 1 exchange. This helps me because I can now buy goods from whoever takes Kevin's IOUs, but it limits my liabilities. Basically, I'll set two values to govern my relations with each person. First, I say how much of their IOUs I'm willing to accept for direct sales, and I'll set a second level saying how much I'm willing to accept just to "grease the wheels"--in exchange for my own IOUs.
Well, I signed up for Ripple and described it on my own blog...and I have one more thought.
Mutual-credit systems aren't very appealing during times of low interest rates. Since we seem to be coming out of such a time, we may find the appeal of mutual credit rising as merchants look for a way to keep business moving even when money is tight. Maybe. Too bad I'm not a merchant.
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