KarmaCoverage

I really enjoyed the Business Model portion of this conversation. Both Miguel & the Monero guy made some statements that were very on point. For the Risk Markets, KarmaCoverage is the business model, RCL is the ledger tech.

http://a16z.com/2017/05/19/congressional-blockchain-caucus/

I was watching this video the other day on Corda. I was surprised and impressed. Still have not got the concepts fully in my head yet, so need to learn more, but the fact that Corda does not have a universal "ledger", and that every transaction does not have to be 'published' to a global ledger is a powerful enabling functionality. They use "windows" of time, and a type of PayChan like feature called "flows" to do off ledger transactions. Then "Notaries" which I think are like Validators, but since there is not 1 single universal "ledger" the network's graph does is not required to have overlap like RCL which requires the topology to have some amount of overlap. I think Corda is unlike any other "blockchain" which I have run across. Does anyone know more? Links? Videos? https://vimeo.com/192757743/c2ec39c1e1

These zero year olds are really getting out of control. Just saying.

RCL is supposed to be a "market for float". This represents an opportunity space, $27 trillion that does not need to be "parked" as dead money doing almost nothing. I'm not sure how to elaborate on what "prime the pump" means. If you have ever dug your own well (surprisingly easy in FL with shallow water table), before you turn the pump on, you need to fill the system with water. If you turn the pump on and "run it dry" the motor will burn up because it depends on the water for heat removal. So you "Prime the pump" making sure the system is full of water, both in the pump and the input pipes. The analogy to financial markets is that if you turn on a market, as has happened with RCL, without priming the pump, aka filling the system with water aka liquidity, then nothing will happen. It will simply move air around, which has no value, because nobody cares. Nobody is short of air, the system is made to supply water not air. Once the buyers and sellers of Liquidity/Float show up, the pump will move that value via a method (pathfinding) that is better than the existing bucket on a rope method (aka nostro/vostro). RCL has been running relatively dry for it's entire existence. But sometimes, if you have to run a pump dry, it can prime itself before it burns up. As long as water/liquidity gets into the system before the pump burns up. Then it will do it's thing. In this case, create utility value, aka cost savings (improving the bucket on a rope method) of moving international value flows. --- As a side note, I have always found it interesting that you can dig a well down 33 feet and still have the pump at the top (providing suction) but if you must go more than 33 feet deep the pump has to be placed at the bottom (pushing water up, not sucking it up) because you run out of https://en.wikipedia.org/wiki/Ambient_pressure and the suction can only produce up to "ambient pressure" which comes from the weight of the atmosphere. Hope that helps

I specifically acknowledged the SWIFT idea, which i have seen several times, and give that argument a maximum of half merit. Regarding the Lockup, meh. ... I trust Ripple Inc is smart enough to not shoot themselves in the foot, and other folks do not. So, I think the lock up will mean more to other people than it does to me personally. Regarding the supply limits, and the burning up of XRP for TX fees, this matters. This will put long term upward pressure on the price of XRP. In the short term, nothing will create more upward pressure on XRP than increasing Liquidity Depth, and solving the Prime The Pump problem on RCL. This is a very difficult problem to solve. Start ups are all about removing Risks, one after another, until the business is exposed to the minimal amount of risk possible, which will maximize value. IMHO, once the pump is primed, both Ripple Inc equity and RCL's value will gap up, due to the risk being removed. But like I said in that little write up, Value is just an opinion, and that is only my opinion. A market price is the result of a crowdsourced opinion.

how do you calc that?

I have been asked to answer this sort of question in other places, and it continuously pops up here also, so... https://medium.com/@KarmaCoverage/i-keep-getting-asked-about-xrps-value-6018c6f33e5c

@Eik I have not had time to review some of the new documentation or content. My limitations start at getting any info out of the hashes, and I dont understand any of Etherum code constraints. That said, it looks to me that an ILP tx was executed cross ledger between RCL & Etherum. Which makes sense because the Etherum does Smart Contacts so the escrow functionality should be easy to code coupled with the Smart Contact-ish PayChan functuon, can both preform simular enough actions to sync via an ILP Connector. The Value flow is being dually expressed/accounted for on both ledgers. There is a binary set of TXs that will occure on both ledgers, yay or nay. The Value flow is changing denominations on the ILP Connector's ledger, or series of Connectors. The thing I need to think about more is...Time Time can have tricky implications.

I'm only saying this to be funny, keep it up, but... These sound like a weather report.

This is an interesting thought.

Yep that is the one, what ever happened to singpolyma?

I think I remember someone, maybe @Sukrim ,not sure? who did a rough QR code with payment functionality and put it on github. This was several years ago though.

Exactly why I posted it here, to beat the idea up a little bit. To go short the Trader needs to be able to sell the XRP on the open market, then wait hoping it goes down so the Trader can buy XRP on the open market for cheaper, and return the XRP to the Exchange. By using a funded PayChan, the Exchange knows how much XRP it can make available to Traders for going Short. Ripple can manage this, adhering to their XRP MM strategy. The key is that, the Exchange can enable Traders to go Short without... 1. Borrowing XRP from other Trader's accounts. (this is how it is done in the stock market, sort of) 2. Going to the Open Market to buy XRP with the Exchange's own money, putting the Exchange at risk of price movement from XRP. Plus the Buy transaction sort of negates the whole desire to Sell the XRP once it is in the Trader's acct. 3. The Exchange is not being required to hold XRP in inventory, again exposing the Exchange to risk of price movement from XRP. The key here is that a Trader who wants to Short XRP, wants the Downside Risk of XRP. But there needs to be a way to not expose the Exchange to the Downside Risk. An Exchange is not in the business of taking on trading risk. Ripple Inc is already exposed to this downside risk, whether or not the XRP is in their Cold Wallet, or stored in a PayChan. When the Trader wants to go Short XRP, they place a Short trade with the Exchange, who requests a receipt from Ripple Inc. Then the Receipt is cashed and the XRP moved from the Exchange to the Trader's wallet, and the Trader sells the XRP on the open market. The Exchange can charge a fee as a % of the value that the Exchange arranged to lend to the Trader in XRP. I think 5% was what the one exchange doing this offered. The Exchange keeps the 5% interest, basically risk free because they did not expose themselves to XRP. Now if the Trader's acct gets to low the Exchange will hit the trader with a Margin Call and freeze their accounts, this is how it normally works in the stock market. When the Trader returns the borrowed XRP to the Exchange. Depending on the terms agreed upon by Ripple Inc & Exchange, the Exchange can use the XRP in lue of future Receipt Requests from Ripple Inc; or the XRP can be kept in a multi-sig wallet with some sort of agreement about when the XRP will be returned to Ripple Inc. What does Ripple Inc get out of this whole thing? A solution to risk management for Traders via Shorting XRP, which should help encourage liquidity on RCL, improving the utility value of XRP. That is the thought, beating the idea up is why I posted it.

Those are unrelated concepts, I was just trying to give some background on the author, and hint at what topic I will write about in future writings. Basically, just ignore the statement about Insurance being a credit market, till some other stuff gets published. If you want to, you can think about RCL and the role of IOUs & Trustlines, and find the few threads here where I have previously said, "Risk is the killer app for distributed ledgers"... and I will expand on that with future articles. (although a few here have seen the articles already) KarmaCoveage is closer to Fugger's original thinking. None of that has to do with using PayChan to enable Ripple Inc to extend XRP based credit to Exchange/MMs, thereby enabling Exchanges to allow Traders to go Short XRP. Not being able to go Short XRP is something that has been a problem for a while. It is a necessary capability of any market for Traders to manage their Risk. Edit: I put in an extra statement at the end of the intro to clarify the rest of the article is not about the Risk Markets. Thanks @Eik for the feedback.