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Wandering_Dog

The impossibility of liquidity in xrp

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@Wandering_Dog 

Are you in fact saying that ultimately there won’t be enough trucks ( XRP’s) to transport the ever growing amount of money ( due to fractional banking) all around the world? 

Imho XRP is a special truck:  it can increase and adjust it’s maximum load by a metric we call “ price” . 

Just my 2 trucks. 

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1 minute ago, Wandering_Dog said:

1) The quantity of a settlement money supply is either fixed or not-fixed, the actual amount at some time t is largely irrelevant when considering stability, only the dynamics of expansion and contraction of said supply are relevant.

2) Gold certificates are ledger entries and can possess the exact same characteristics.

3) see 2. 

4) see 2. 

5) Emergent behaviour is unknown, that's what I'm reading here, and that's true, but I don't see how a discussion of emergent behaviour, which we can't reliably simulate, adds to a discussion of stability, except to say "well, we don't know till we try it do we", which seems a bit nonsensical, unless you mean we should just abolish economics as a discipline and wing it :)  

1) I would argue the "quantity" is always relative and dynamic in any system as pricing can never be consistent, being reliant on infinite other factors.  Regardless of that, the point is that physical gold becomes unmanageable at its extremes, where XRP does not.
2) Sort of, but for 99.9% of golds history participants typically did not care about - nor die over - a certificate.  Possessing the item required physically acquiring the actual item.  One property of XRP is that physically acquiring the actual item is able to be done in 3-4 seconds, and without either party needing to trust each other or know who each other is.  A gold certificate is an IOU, whereas transferring XRP is equivalent to physically delivering the actual gold.
3) See 2.
4) See 2.
5) This is the crux as I see it.  We simply are trying this out, and like many things humans are trying out (such as AI that can evolve to be smarter than the sum of all human intelligence and knowledge), they are inevitabilities of technological progress - that is, whether its a good idea or not becomes an irrelevant concern.  It is simply going to happen.  Now, given that is effectively a definite - how this will impact us?  Given that the properties of these new economic systems are far beyond anything we can previously compare them to, and that they invariably exist well outside the previous constraints of the prior models, one way it may impact us is that we could- IMO, very likely - have to "abolish economics as a discipline and just wing it".  ;)

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12 minutes ago, Ripple-Stiltskin said:

Maybe, but first I’m trying to understand what you’re stating in the OP yourself. It’s a high level, academic description of a possible theoretical problem ( fixed supply of XRP puts a restraint on liquidity?), but can you describe in simple words with a concrete example how and where this problem will arise?  For clarity purposes. 

I served, I'll give an example, this is an extreme example and the simplest I can think of atm: 

A customer of JPM needs to move USD to account holder at DB, converting USD to EUR, according to some debt contract. Bob holds the only XRP in the system, and XRP is the standard imposed on all participants for settlement. Bob refuses access to his XRP, thereby preventing the contract from settling and economic activity from occurring. Instead,  if we said Bob held all the reserves in the system but refused access to said reserve, the central bank can step in and create and loan reserve in order to clear the market.

 

 

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19 minutes ago, jcdenton said:

Not sure what to make of your laughing emoji reaction to my response. I did mean to say that your OP was very smart and on point. 

No offense meant, I laughed when I read your post, my first thought was maybe XRP will be very successful for reasons we don't yet know and it would be funny to read the topic in that context. As you say, if XRP was implemented and failed according to the context of the topic I'd be sad, so I can put that sad smiley here: :(

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Posted (edited)
11 minutes ago, Wandering_Dog said:

I served, I'll give an example, this is an extreme example and the simplest I can think of atm: 

A customer of JPM needs to move USD to account holder at DB, converting USD to EUR, according to some debt contract. Bob holds the only XRP in the system, and XRP is the standard imposed on all participants for settlement. Bob refuses access to his XRP, thereby preventing the contract from settling and economic activity from occurring. Instead,  if we said Bob held all the reserves in the system but refused access to said reserve, the central bank can step in and create and loan reserve in order to clear the market.

 

 

That’s not only a maximum supply, but also a highly centralised supply. One person holds all the trucks and refuses to put them on the road.  Same with the central bank in your example:  if they don’t step in to create extra reserves then we’re in trouble. Which we already experienced in the past. 

Still: I find it a highly theoretical, but not impossible, problem to occur. ( in fact 2 problems: supply is limited to a max and ownership is centralised.> in both cases the price will be the dealmaker imo).

Edited by Ripple-Stiltskin

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7 minutes ago, Wandering_Dog said:

Bob refuses access to his XRP

Who is Bob? MM? If so there are many other MMs that can step in.

If Bob is "A customer of JPM" i can't imagine a reason for Bob to "refuse access to his XRP".

Or I'm not getting your example properly..?

Don't know why, but this thread makes me wanna HODL even stronger...

Thank you all.

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15 minutes ago, Professor Hantzen said:

1) I would argue the "quantity" is always relative and dynamic in any system as pricing can never be consistent, being reliant on infinite other factors.  Regardless of that, the point is that physical gold becomes unmanageable at its extremes, where XRP does not.
2) Sort of, but for 99.9% of golds history participants typically did not care about - nor die over - a certificate.  Possessing the item required physically acquiring the actual item.  One property of XRP is that physically acquiring the actual item is able to be done in 3-4 seconds, and without either party needing to trust each other or know who each other is.  A gold certificate is an IOU, whereas transferring XRP is equivalent to physically delivering the actual gold.
3) See 2.
4) See 2.
5) This is the crux as I see it.  We simply are trying this out, and like many things humans are trying out (such as AI that can evolve to be smarter than the sum of all human intelligence and knowledge), they are inevitabilities of technological progress - that is, whether its a good idea or not becomes an irrelevant concern.  It is simply going to happen.  Now, given that is effectively a definite - how this will impact us?  Given that the properties of these new economic systems are far beyond anything we can previously compare them to, and that they invariably exist well outside the previous constraints of the prior models, one way it may impact us is that we could- IMO, very likely - have to "abolish economics as a discipline and just wing it".  ;)

1) I think with a fixed quantity settlement system, regardless of price movement, the dynamics are sufficiently well known. The question is can someone absorb losses without consequence* (Flexible=yes, Central Bank | Fixed=no, Ledger is finite), and can someone act to clear the market at all times (Flexible=yes, Central Bank | Fixed=no, ledger is not elastic). On your second point, yes certainly, we must assume, say, some persistent legal system for gold certificate ledger entries to be "manageable", but we may also equally assume other things for xrp to be "manageable". How this relates to stability, I would argue it does not.

2) They did, absolutely, material settlement systems have always had corresponding ledger (credit) systems, and people did die over said entries. And no, the item does not need to be physically held to settle some transaction, historically almost all transactions are ledger based, same is true of the Fed, and the pooling paper I posted in another thread is a modern example of this behaviour. Whether we choose to use XRP or anything at all, gold or otherwise, is simply legal convention, there is no difference, and you and I clearly see this very differently.

3)re. 

4)re. 

5) "It is simply going to happen" is a horrifying argument--slavery is inevitable, it's going to happen, monopolization leads to concentration of asset ownership leads to me owning your family, "it's simply going to happen, accept it now". Quatsch. Bringing the world back onto a fixed settlement system "because it's inevitable, just accept it"? I cannot disagree more strongly here: test it, think about it, do anything, just don't go implementing without due regard! Quatsch.  

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31 minutes ago, Wandering_Dog said:

I served, I'll give an example, this is an extreme example and the simplest I can think of atm: 

A customer of JPM needs to move USD to account holder at DB, converting USD to EUR, according to some debt contract. Bob holds the only XRP in the system, and XRP is the standard imposed on all participants for settlement. Bob refuses access to his XRP, thereby preventing the contract from settling and economic activity from occurring. Instead,  if we said Bob held all the reserves in the system but refused access to said reserve, the central bank can step in and create and loan reserve in order to clear the market.

 

 

Ripple plays the CB role in your example and will be in the foreseeable future. Why do you even care about “Bob”?

Ah, wait, your trolling gets better..

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A brief addendum - I am not against depositing my XRP in regulated custody accounts in order to earn stablecoins. I think that for many of the younger folks in this forum, this is precisely how XRP will provide residual income for many people. The tough choice to sell the asset or reap the interest with different custodial solutions may be quite real.

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22 minutes ago, WillGetThere said:

Who is Bob? MM? If so there are many other MMs that can step in.

If Bob is "A customer of JPM" i can't imagine a reason for Bob to "refuse access to his XRP".

Or I'm not getting your example properly..?

Don't know why, but this thread makes me wanna HODL even stronger...

Thank you all.

It doesn't matter if Bob is a customer of which bank, or the price, or anything else. In the simplest sense, is the situation possible? Yes. Is the outcome as stated? Yes. For the sake of the example, it is a gross simplification, to be more accurate we could draft up a structure of debt and simulate it to demonstrate a much more complex system, but we don't need to if this example works for our purposes.  

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2 minutes ago, Lamberth said:

Ripple plays the CB role in your example and will be in the foreseeable future. Why do you even care about “Bob”?

Ah, wait, your trolling gets better..

Sigh. Even if Ripple "played CB", they can't expand the supply, so they aren't a central bank, and they wouldn't be able to resolve the problem. This is because the money layer below the settlement layer is larger.  

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1 minute ago, rootvegetable said:

There is no theoretical or mathematical reason why the money supply can't be fixed.

I just gave you one @rootvegetable. Please, if you aren't going to support your arguments, and just post single sentences as if you're impersonating Confucius, just don't bother posting at all, please :drinks:.

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