Creator Mt. Gox and eDonkey are working on a secret Bitcoin project

Jed McCaleb is a famous figure in the world of Bitcoin and p2p. In 2000, he created one of the first successful eDonkey file-sharing networks, and in 2010 he opened the Mt. Gox, which for several years was the largest Bitcoin exchanger. It is important to note that in 2011 he sold Mt. Gox, and has nothing to do with the problems that the exchange is experiencing now.

Since 2011, MakKaleb worked on the creation of a distributed exchange Ripple for the exchange of any currencies and goods. However, now on the official website of Ripple Labs (previously - OpenCoin) - the organization that leads the development and promotion of Ripple, it is not mentioned in the project team. A video interview with him was recently published where he confirms that he no longer works with Ripple Labs. LinkedIn’s McCaleb profile indicated that he worked at OpenCoin until July 2013.

On February 10, McCaleb registered the domain secretbitcoinproject.com , on which the stub now hangs in the form of a photograph of the planet Neptune and the following text:
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When I sold Mt. Gox a few years ago, bitcoin was worth less than a dollar. Today, Bitcoin exists in new conditions. Mt Gox is having a hard time keeping up with them. Now I am creating something that will benefit both Bitcoin and all of you.

I need alpha testers.

Jed

McCaleb has not yet distributed any details about his secret project - he only adds that at the moment he is hiring developers and designers. Considering his experience in creating distributed applications and the role he played in the Bitcoin ecosystem (his name more than once appeared in discussions about the real identity of the legendary creator of Bitcoin Satoshi Nakamoto) - this may be a promising and interesting project. In order to better understand the views of McCaleb on the future of digital currencies, it will be useful to elaborate on his latest project - Ripple .

Ripple is often mistakenly called the next clone of Bitcoin and lumped into one heap with several dozens of other “-coins” that have appeared in abundance on the wave of interest in cryptocurrencies. In fact, Ripple works in a completely different way; moreover, this network was created several years before the advent of Bitcoin, in 2004.

The first author of Ripple was Canadian programmer Ryan Fugger. He conceived the system as a network of equal participants who open “credit lines” for each other, and transfers of funds are carried out along chains of mutual trust that are built within the network. In this network, each user actually becomes an issuer of his own currency, which his friends, colleagues, clients, or just acquaintances can accept for payment within the limits of confidence set by themselves.

The first version of Ripple never took off. The network was unable to dial a critical number of nodes so that it would be possible to easily build chains of trust between two arbitrary participants. However, in 2011, the project was noticed by members of a much more successful and large Bitcoin community. Many, including Jed McCaleb, were not too happy with such Bitcoin features as the need to waste electricity for mining, slow transaction registration and dependence on traditional centralized exchangers to communicate with the external financial world. Together with entrepreneur Chris Larsen, McCaleb founded the company OpenCoin, which was engaged in the development of a distributed exchange of the new generation based on the ideas of Ripple. The website of the old Ripple system is now of historical interest only and is stored on the classic.ripplepay.com domain .

The new generation Ripple system is based on the same principles of mutual credit between the participants as in the original version, however, a number of innovations have been introduced, taking into account the experience of building distributed networks in recent years and some elements characteristic of Bitcoin. Ripple developers maintain an extensive wiki , the pages of which describe in detail all the elements of the system. Below I will try to describe Ripple in a nutshell.

First of all, the new project team decided to move away from the romantic ideas about the absolute equality of all network nodes. As you know, the most successful file-sharing network - BitTorrent, is not a peer-to-peer one - for convenience and quality control of the contents of distributions, trackers that contain descriptions of distributions, torrent files or magnet links are vital. The Bitcoin network is also quite far from peer-to-peer - now the network is maintained by professional participants - miners and financial intermediaries who earn money on it, but most users do not mine bitcoins or even store a local copy of the block chain.

The Ripple network initially provides for the division into regular participants and professional intermediaries supporting gateways (gateways). It is the gateways that are responsible for maintaining the integrity of the network and the possibility of mutual exchange between any two participants. Unlike the original Ripple idea, where connectivity was guaranteed only by the hope that the “six handshake theory” is correct, in the new version each user only has to choose a set of local gateways with which he can work directly, and the gateways themselves have a vested interest in to connect with the rest of the world, including globally, through top-level gateways (Market Makers). At the same time, the gateways are deprived of a monopoly on their services - any member of the network who can support the operation of the Ripple server and can convince a sufficient number of users to trust it can become a gateway.



Such a system is very similar to the architecture of the Internet - there is no single center, at the local level, local providers provide work, and at the global level - several dozen of the largest first-level providers. In the world of finance, a similar system, hawala , has existed for more than a thousand years and is still widespread in Muslim countries and is actively used by migrants to transfer money to their homeland. Since hawala is not controlled by the state, financial control authorities are trying to deal with it using the traditional for anonymous distributed systems charges of financing terrorism and money laundering, but without much success. Supposedly, there are about 5,000 hawala brokerage points in the world now — enough for the network to survive any attempts to destroy it, but not enough for all participants to know each other either directly or after one or two acquaintances, which guarantees the integrity of the participants.

Another feature that guarantees the possibility of exchange between any two Ripple customers is the local currency of the system, “Ripple Credits” or XRP. This currency serves as a kind of “glue” that allows you to exchange, even if there is no direct exchange rate between the two currencies. A similar role in the global financial system is played by the main reserve currencies - the dollar, euro, yen and others.

The second function of XRP is protection against spam and DOS attacks. All information about Ripple transactions is stored in a distributed database, similar to a bitcoin block chain, but having a tree structure. To make this database unprofitable to enter meaningless information, overloading the system with many useless transactions, each transaction in Ripple costs a small amount of money. So small (hundredths of a cent) that it becomes noticeable only when many thousands of transactions are registered. This does not create any problems for legitimate users, but makes spam and DOS attacks a very expensive pleasure.

Unlike Bitcoin, Ripple credits are not mined by mining; all one hundred billion XRP existing in the system are pre-created. To prevent double writing off and other malicious manipulations with a distributed database, a consensus mechanism is used. The integrity of the database is monitored by special nodes - validators trusted by the majority of network participants. A guarantee of their honesty is the openness of all information on transactions and the possibility at any time to exclude a validator, who has become suspicious of himself, from the trusted list. The list of validators by default includes the most diverse nodes representing different countries, institutions, organizations - so that the likelihood of collusion between them is practically excluded. Each user is free to make changes to this list.



With such a scheme, an attack of 51% is impossible - the level of trust in each of the validators is completely independent of the computing power and financial resources that it possesses. Validator can be a state, a large bank, a public organization, or a private person, the only criterion for his choice is impeccable reputation.

Since there is no need to wait for the next block to confirm transactions, transaction confirmation is much faster than in the Bitcoin network - from units to tens of seconds. There is no electricity consumption in the calculation of useless hashes.

The absence of mining and the initial concentration of the entire mass of XRP in the hands of the authors of the project caused and still suspicions many people familiar with Bitcoin. Some even believe that Ripple is just a pyramid. However, for the pyramid Ripple looks too thorough. Most likely, the point is in the promotion strategy chosen by the project owners. If Bitcoin was going “in partisan” way, then Ripple from the first days of its rebirth resembles a classic respectable startup. Ripple Labs received venture financing from several funds, including such reputable companies as Google Ventures and Andreessen Horowitz. A large team of developers for a very long time preparing the code of the reference implementation of the host for a public release. Ripple sources were completely open only in September last year, before this partial closeness was another source of distrust to the system. In the same unhurried corporate manner, Ripple Labs deals with the initial distribution of XRP stocks.

This distribution is the way of targeted distribution of individual segments of the target audience - cryptocurrency enthusiasts, any developers with an account on Github, entrepreneurs, people participating in distributed computing projects - everyone who, according to the developers, has to form the core of the network before it comes out open swimming As of January 31, 2014, 7,379,478,083 XRP were distributed . Naturally, a significant part of Ripple credits will remain in the hands of the creators and employees of Ripple labs, but the same is true for Bitcoin - in the first months of cryptocurrency mining, Satoshi Nakamoto himself worked on mining, and in his hands concentrated at least about a million coins - about half a billion dollars at the current rate.

Now Ripple is among the twenty largest cryptocurrencies by turnover. With the current XRP rate, the total capitalization of the system’s internal currency is about one and a half billion dollars - however, this is not the most important indicator, since Ripple is primarily a distributed exchange and protocol, and currency plays a supporting role. Ripple is not a competitor and not an alternative to Bitcoin. On the contrary, it is a network that can benefit any electronic currency. Rather similar to how McCaleb describes his secret project. Will it be a fork Ripple or something fundamentally different - time will tell.

UPD: Habrayuzer dyakov has just published an article with a more detailed description of the details of the operation of the Ripple protocol. Ripple week on Habré can be considered open?