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Originally Posted by mayabong
I've really been trying to wrap my mind around Ripple. From what I understand its not just for cryptocurrencies but for all currencies. Its all based on trust. Bob wants to buy from me but I dont know Bob, but you know BoB and trust Bob and I know you and trust you, therefore I trust Bob and I can sell to bob. (or something?)
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apparently, they've created their own internal monetary system, a ripple xrp credit, i think it is called.
this is from a digital coin forum where they discussed it a bit
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basically ripple is a generalization of LETS where everybody can operate his own currency. Any unit can be used, so to achieve price stability the unit can be defined as a basket of commodities without the need of actually storing those commodities to back the promises, the promises are backed by the goods and services that the issuer produces. But not everybody will accept your currency, only the people who trust you. By finding paths of trust that indirectly connect the payer and the recipient, a ripple transaction can be made between parties that don't trust each other like if they were using cash. Ripple uses the existing network of trust between people to enable trade. And the unit of account can be gold, bitcoins, hours, terras, USDs, Kgs of carrots...whatever the users agree is better for them.
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