Validating & Tracking Node Incentives

[kyur4thich]

Hi, I am new to the ripple world and thirsty for knowledge. Firstly, I want to know what the incentive is for the validating & tracking node operators? On the ripple site they say give some altruistic reason, but really? And secondly, what is the fee structure for ripple? That is, how does ripple make money from the transfers?

Thanks!

kyur

[Xi195]

17 minutes ago, kyur4thich said:

Firstly, I want to know what the incentive is for the validating & tracking node operators?

Validators are not incentivized monetarily though they have a vote in how network operates going forward. As an added benefit, technology providers wanting to flaunt their blockchain prowess can claim their validator or node status as an example of their expertise by participating in the future financial system.  Might sound altruistic, but that is indeed the incentive. Ripple's general thought process is that consensus mechanisms such as PoW or PoS and their underlying incentive structures promote centralization.

23 minutes ago, kyur4thich said:

And secondly, what is the fee structure for ripple?

You can see network fees here: https://xrpcharts.ripple.com/#/metrics. These network fees however aren't collected by Ripple. Instead, a small amount of XRP (network fee) is destroyed with each transaction. The amount changes dynamically and acts as an anti-spam measure. 

24 minutes ago, kyur4thich said:

That is, how does ripple make money from the transfers?

As I mentioned above, they don't make money from transaction fees. Instead they provide software and related services that allow institutions to facilitate fact faster, more transparent payments. 

If you're feeling curious, you can read about this and more in the resources available here: https://ripple.com/collateral/
Welcome to the forum by the way. 

[kyur4thich]

Thanks Xi, massively helpful

[JoelKatz]

The cost to run a validator or hub, or pretty much any server on the Ripple network, is roughly comparable to that of running a Bitcoin full node. That is, the actual hardware and bandwidth expenses are very, very small. The incentive is that you promote the health of the network and, for a validator, have a say in the evolution of the network.

While consensus does have several advantages over PoW, one disadvantage is that you do have a public good problem. Validators produce a public good that benefits all users of the network, but they don't have any obvious way to turn that into revenue. While their costs are low, they are not zero. We've been talking to our investors, exchanges, our customers, universities, and all kinds of other people and organizations. Companies that operate network infrastructure have expressed interest in running a validator both for publicity reasons and as a way of demonstrating the reliability of their infrastructure. Exchanges have expressed interest in running one to promote the health of the network.

[Xi195]

10 minutes ago, kyur4thich said:

Thanks Xi, massively helpful

No problem. Linux (XRP Consensus Ledger) and Red Hat (Ripple's software services) is probably a decent metaphor for how it works.

[Vince]

Maybe this (quantum verification) is something to implement in the (near) future:  https://www.ethnews.com/the-russian-quantum-center-has-created-a-quantum-safe-blockchain

 

With kind regards,

Vince.

Edited May 31, 2017 by Vince

[thinlyspread]

9 hours ago, JoelKatz said:

We've been talking to our investors, exchanges, our customers, universities, and all kinds of other people and organizations. Companies that operate network infrastructure have expressed interest in running a validator both for publicity reasons and as a way of demonstrating the reliability of their infrastructure.

That's really interesting JK, thanks. I am pleasantly surprised at so much interest from diverse parties. Very excited to see Ripple decentralise their platform and expand and scale over the next few years.

[kyur4thich]

thanks a lot guys. And thank you too Joel! the man himself!!  I am honoured