Ripple Developer Conference 2013 at Money2020

Agenda
8:30-9:30am

– Registration

9:30-9:50am

– Welcome and Introduction, Chris Larsen, CEO, Ripple Labs

9:50-10:20am

– Ripple Technical Overview, Evan Schwartz, Software Engineer, Ripple Labs

10:20-11:10am

– Integrating with Ripple for Merchants and Gateways, Bob Way, Integration
Engineer, Ripple Labs; Denis Kiselev, CEO, SnapSwap; and Brian KellerHeikkila, CTO, ZipZap

11:10-11:20am

– Break

11:20am-12:10pm

– Ripple Architecture and Advanced Uses, David Schwartz, Chief
Cryptographer, Ripple Labs

12:10-12:30pm

– Future Focus for Our Engineering Team, Stefan Thomas, CTO, Ripple Labs

12:30 onward

– Networking

Summary
Ripple and Ripple Labs

• a distributed payments protocol

• venture backed company that

• a new currency - ripples (XRP)

contributes code and promotes the

• the world‟s first distributed currency

Ripple protocol

exchange

Chris Larsen, CEO, Ripple Labs

Math Based Currency Movement
• Focus: Erosion of trust political currencies
• Solution: Trust in math relationship of servers in a distributed network
- No central authority to debase money supply.
- Fixed amount that can‟t increase

AU

BTC/XRP/LTC


Virtual Currency is Just the Beginning


The World Needs a
Transaction Web Protocol
Information Exchange

Value Exchange

“world is flat”

“world is curved”


Confirmation in a Decentralized System
Mining Method (Bitcoin)
• Reward first „miner‟ to solve a math
problem that is a confirmation.

• Need extremely powerful computers,
energy intensive.

Consensus Method (Ripple)
• Current state of global ledger.
• Transactions that are valid to majority of servers
are updated to ledger.

• 5-10 second confirmations.

• Average 10 minute confirmations


Benefits as a Payment Protocol

Any Currency

Global

No Chargebacks

Fast

Free


Peer-to-Peer Architecture


A Common Ledger


Ripple is a Protocol
Like SMTP, a Protocol for Moving Money
• Ripple is a set of standards
• “Server Calls” to Send, Receive, etc.
• Transact without Intermediaries
• Decentralized System
• Open to Developers
• No Network Operator


Gateways
Cash in, Cash Out
• Gateways take deposits and issue local currency balances on Ripple
• Balances can be transferred across the ledger without intermediaries
• Gateways earn fees as they wish


Distributed Exchange
• Can create bid/ask offers for any currency pair from
any issuer

• Participants can profit from forex spreads

• Ripple routes transactions through a path finding
algorithm to find the lowest cost execution

• Supports algorithm-driven trading


The Role of XRP in Ripple
1. protects network from:
- DDOS attacks
- ledger spam

2. universal medium of exchange
- no counterparty
- every node trusts


Pre-Mining
Ripple doesn‟t need to incent transaction validators with XRP, so mining
is optional. Instead we chose to use XRP to support:
The Network

– Build and incent an amazing team (Ripple Labs)
Utility

– Give away XRP to as many consumers as possible
Liquidity

– Incent market makers with long-term forgivable XRP loans


What, How, Who Cares?
(in 20 minutes)

Evan Schwartz

What is Ripple?

Evan Schwartz

Open Source Payment Network

Evan Schwartz

Four Types of Users
Basic Users

Merchants

Market Makers

Gateways

Evan Schwartz

Basic User Experience

Evan Schwartz


What could you
do with that?

Evan Schwartz

Merchant Experience

Evan Schwartz

Market Maker Experience

Evan Schwartz

Interesting…

Evan Schwartz

Gateway Experience

Evan Schwartz

Transactions in any currency?

Evan Schwartz

Too many pairs
of currencies

Evan Schwartz

XRP connects people

Evan Schwartz

XRP connects
currencies

Evan Schwartz


Did you really need a caption?

Evan Schwartz

Business Integration

Bob Way, Integration Engineer

Ripple Integration
Three Steps
1. Set-up your Ripple account and trust lines.
2. Install a local rippled server

3. Automate your business processes


Step 1
The Ripple Ledger


NewGate
A gateway in 10 minutes

NewGate


NewGate
user trust

NewGate

Alice


NewGate
deposit

NewGate

$5

Alice


NewGate
second user trust

NewGate

$5

Alice

Bob


NewGate
payment

NewGate

$5

Alice

Bob


NewGate
withdrawal

NewGate

$1
$4

Alice

Bob


NewGate
make it real!

LAME!
NewGate

$4

Alice

Bob


NewGate
making it real!

SnapSwap

Offers

Bitstamp

Outbound
Bridge

Bitcoin

NewGate

$4

Alice

Bob


NewGate
liquidity

SnapSwap

Bitstamp

Offers

$10

Outbound
Bridge

Bitcoin

$10

Mark

NewGate

$4

Alice

Bob


NewGate
inter-gateway payment

SnapSwap

Bitstamp

Offers

$10

Outbound
Bridge

Bitcoin

$8

Mark

$2
NewGate

$2

Alice

Bob


NewGate
pay anyone

SnapSwap

Bitstamp

Offers

$10

Outbound
Bridge

Bitcoin

$8

Mark

$2
NewGate

$2

Alice

Bob


Denis

Denis Kiselev
SnapSwap

$2
SnapSwap

Bitstamp

Offers

$8

Outbound
Bridge

Bitcoin

$8

Mark

$4
NewGate

Alice

Bob


NewGate
automation

NewGate


NewGate
web application

Code

NewGate


NewGate
user interface

Code

NewGate


NewGate
funds interface

Code

NewGate


NewGate
rippled interface

Code

NewGate


Step 2
Install rippled


NewGate
JSON messages over websockets or RPC

Code

NewGate


Step 3
Using the rippled API


Two Core Tasks
1) receive incoming payments

Monitor for incoming
payments
Code


Monitoring your Ripple address
websocket

account_info - websocket command
{
"command":"account_info",
"account":"rUPotLj5CNKaP4bQANcecEuT8hai3VpxfB",
}


rpc

account_info - RPC Call
curl -X POST -d
'{
"method": "account_ingo",
"params": [
{
"account": "rHb9CJAWyB4rj91VRWn96DkukG4bwdtyTh",
}
]
}' http://s1.ripple.com:51234


{

"result":{
"account_data":{
"Account":"rHb9CJAWyB4rj91VRWn96DkukG4bwdtyTh",
"Balance":"114459798",
"EmailHash":"DF1352F23CD32812F4850B878AE4944C",
"Flags":0,
"LedgerEntryType":"AccountRoot",
"OwnerCount":0,
"PreviousTxnID":"0FA9B61C5EED265BAAA3...",
"PreviousTxnLgrSeq":2169731,
"Sequence":26510,
"TransferRate":4294967295,
"index":"2B6AC232AA4C4BE41BF49D245...",
"urlgravatar":"http://www.gravatar.com/avatar/df1352f23cd32812f4850b878ae4944c"}
"ledger_current_index":2671768,
status":"success"}

account_info
response

}


api calls

account_info
account_lines
account_tx
account_offers


Two Core Tasks
2) send outgoing payments

Code

Send outgoing payments


Sending Payments
api calls

ripple_path_find
path_find
format “payment” transaction
sign
submit


Tools
Woot!

Understanding the Ledger
• ripple.com/graph
• ripple.com/tools/info

Learning the JSON API
• ripple.com/wiki/RPC_API
• ripple.com/tools/api/

For Your ripple.txt File
• ripple.com/tools/txt/


Brian Keller-Keikkila
CTO ZipZap


integration

Pay with CASH.


ZipZap
integration

Alice

$
Payment
Center

$ Bob
ZipZap Merchants

ZipZap
integration

SnapSwap

Bitstamp

$

ZipZap

ZipZap
integration

SnapSwap

Bitstamp

$


ZipZap
integration

SnapSwap

Bitstamp

$

$

ZipZap

ZipZap
integration

Alice
SnapSwap

Bitstamp

$

$
Payment
Center

$

$
ZipZap

ZipZap
integration

Alice

$

SnapSwap

Bitstamp

$

$
Payment
Center

$
ZipZap

integration


integration

What‟s Next?

THE WORLD.


About Me
David Schwartz
I‟m the Chief Cryptographer at Ripple Labs.
I‟m also known as JoelKatz on the Bitcoin forums and am told that I am a
leading voice in the crypto-currency community.
Before that, I developed secure messaging and storage systems used by
companies such as CNN and government agencies including the NSA.

David Schwartz, Chief Cryptographer

A platform for issuing, holding, transferring, and trading arbitrary assets.

Key Features
• Open source, ISC license.
• Public ledger, public transactions, public history.
• Equal access, peer-to-peer, no central authority.
• Ledger modified by cryptographically signed transactions.
• Fast transactions with reliable confirmation.
• Sophisticated cross-currency and cross-issuer payments.


Ledger
The ledger is public.

Key Features
• Every server can keep a full copy of the current ledger.
• Ledger contains all balances and offers.
• Previous ledgers and previous transactions are not needed.
• The ledger is organized as a chain of hash trees.
- A single 256-bit number identifies a ledger by hash
- Once you know a ledger‟s hash, you can walk the hash tree to see the ledger‟s contents.
- You can walk the hash tree to prior ledgers efficiently.


Ledger Contents
A new ledger built every 5 to 30 seconds.

Ledger Contents
• Header
• State Tree

• Transaction Tree


Ledger Contents
Ledger Header
• Ledger sequence number
• Total XRP in existence

• Hash of the previous ledger
• Hash of the account tree and the transaction tree
• Close time of this ledger and the previous ledger


Ledger Contents
Hash Tree
• Organized as a Merkle tree of radix nodes.
- Inner nodes hold indexed links to hashes of other nodes.
- Leaf nodes hold data.
• Each node has a 256-bit index and a 256-bit hash.
• Leaf nodes can easily be looked up by index.
• Provides fast search and traverse by index.
• Efficient synchronization and comparison.


Ledger Contents
State Tree
• Holds the state of the Ripple network.
• Structured as an indexed hash tree.
• Contains accounts, balances, pathways, offers, and other persistent data.
• Contains some structural information and indexes.
• Represents the state after transactions are applied.
• Holds entries in a binary format that can be converted to and from JSON.


Ledger Contents
State Tree

Key Entry Types
• Account root
• Ripple state
• Offer
• Directory
• Fee settings
• Features
• Ledger Hashes


Ledger Contents
State Tree

Sample Entry
{
"Account" : "rKu4m1UDLGxR6fjhdNEVWrF4gCDhpocWAQ",
"Balance" : "199999990",
"Flags" : 0,
"LedgerEntryType" : "AccountRoot",
"OwnerCount" : 0,
"PreviousTxnID" : "922345F7771870688116ABD484960D5A566F38C...",
"PreviousTxnLgrSeq" : 339000,
"Sequence" : 2,
"index" : "00118F9DC4F5767D6927A98FF749C..."
}


Ledger Contents
Transaction Tree
• Also structured as an indexed hash tree.
• Contains all transactions applied in this ledger.

• Includes metadata for each transaction.
• Metadata justifies changes to state tree entries.


Transactions
Cryptographically signed authorizations to modify ledger state

Basic Structure
• Account
• Public Key
• Signature
• Fee
• Type
• Sequence
• Type-specific information


Transactions
This real transaction was randomly selected.

Sample Transaction
{
"Account" : "rMWUykAmNQDaM9poSes8VLDZDDKEbmo7MX",
"Fee" : "10",
"Flags" : 0,
"OfferSequence" : 62462,
"Sequence" : 582232,
"SigningPubKey" : "0256C64F0378DCCCB4E0224B36F7ED1…",
"TransactionType" : "OfferCancel",
"TxnSignature" : "3044022000ED14…",
"hash" : "FC6F9BC14A7DA643…“
}


Transactions
Metadata justifies ledger changes

Metadata
{
"ModifiedNode" : {
"LedgerEntryType" : "AccountRoot",
"LedgerIndex" : "56091AD066271ED03B106812AD376D48F12680…",
"PreviousFields" : {
"Balance" : "1994177177",
"Sequence" : 582232
},
"FinalFields" : {
"Account" : "rMWUykAmNQDaM9poSes8VLDZDDKEbmo7MX",
"Balance" : "1994177167",
"Flags" : 0,
"OwnerCount" : 71,
"Sequence" : 582233
},
"PreviousTxnID" : "A4BEFDE98429C0C3C310C6FF548ECD73C6E22…",
"PreviousTxnLgrSeq" : 2438196
}


Consensus
Consensus establishes transaction ordering

Key Points
• Ripple‟s method of solving the double spend problem
• Validators agree on a group of transactions to be applied in a given ledger

• Validators sign each ledger they build
• Analogous to a room full of people trying to agree
• All honest servers place a high value on agreement, second only to correctness


Consensus

Why is transaction ordering important?
• Other aspects of the double spend problem are easily solved with deterministic rules
• We have a public ledger
• Ripple has deterministic rules for
- Transaction validity
- Transaction execution
- Transaction ordering within a ledger
• If one transaction must come before the other, then we can easily see that the second one must fail


Consensus

What do validators do?
• Agree on the last closed ledger
• Propose sets of transactions to include in the next ledger

• Avalanche to consensus
• Apply agreed transactions according to deterministic rules
• Publish a signed validation of the new last closed ledger


Consensus

Why is consensus robust?
• If a transaction has no reason not to be included, all honest validators will vote to include it.
• If a transaction has some reason not to be included, it is okay if it is not included

• Valid transactions that do not get into the consensus set will be voted into the next set by all honest
validators

• Algorithm is biased to exclude transactions to reduce overlap required


Consensus

Why is consensus robust?
• Every honest participant values agreement over everything but correctness

• Validations act as a safety.
• Network splits can be detected as they happen
• Validation performance can be monitored, treachery can be proven


Payments
Pathfinding makes sophisticated payments possible

Characteristics of Ripple payments
• Payments succeed or fail atomically.
• Payments are fully confirmed at a well-defined point.

• You cannot give someone an asset they have not agreed to hold.
• A “maximum amount to send” field handles slippage.


Payments
All payments except simple XRP payments require a path

- Alice pays Bob through Gateway.

- Alice‟s balance with Gateway goes down.
- Bob‟s balance with Gateway goes up.
- Gateway sees no net balance change, or an increase if they charge a transaction fee.

- Bob must already have agreed to accept USD from the Gateway or this path is unusable.


Payments
Cross-currency path

- Alice sees her USD balance drop. Bob sees his BTC balance increase.
- Those who placed offers see their USD balances increase and their BTC balances decrease.
- Gateways do not have to deal with any cross-currency aspects.
- Order books link gateways.


Payments
Two types of path links

Account to Account Link

Order Book Link

An account to account link uses a pathway to move
funds from one account to another.

Order book links can change currencies.
Path specifies the order book, not specific orders.

It is helpful to think of funds as being transferred by
their issuers.

Order book links appear with account links for their
issuers.

An intermediary account in a payment path with two
account-to-account links will see one balance increase
and the other decrease.
Account links cannot change currencies, only issuers.


Payments
Division of labor

Pathfinding

Execution

Only one server needs to do the pathfinding work for a
given payment.

Every validator executes the transaction.
Path set is already known.

Pathfinding generates a set of paths for the transaction
and gives an estimate of the cost.

Degrees of separation tend to be short.

Order books are indexed to make execution efficient.

Paths are taken incrementally and more than one path can
be used to get the best rate.

Current Ripple servers use a table driven pathfinding
engine.

Payments succeed or fail atomically.

There is room for innovation in path finding.

Must be completely deterministic.


Trading
Ripple supports order books between all asset pairs.

Market Making

Arbitrage

Marking making is offering to buy and sell the same asset
over a period of time.

Arbitrage is buying and selling the same asset at
approximately the same time to profit from a difference in
price.

Market making in Ripple makes large payments possible
and improves rates.

Market makers link cash-in networks with cash-out
networks, making remittance efficient.

Internal arbitrage involves only transactions inside the
Ripple network. While there will be internal arbitrage
opportunity in the Ripple network, everyone will be
competing for the same opportunities.
External arbitrage involves matching transactions inside
the Ripple network with transactions outside the Ripple
network.


Invisible Ripple
Ripple can be the back end that makes a payment work

Inbound payments using Ripple
• Customer selects product they want to buy.
• Merchant presents customer with payment options.
• Customer selects a payment network they are familiar with.
• Merchant directs the customer to a Ripple gateway, specifies their Ripple account and payment
amount.

• Customer makes payment to gateway using conventional payment network.

• Gateway makes Ripple payment to merchant.
• Merchant credits customer for payment.

Invisible Ripple
Ripple can be the back end that makes a payment work

Advantages
• Customer uses conventional payment network they already know.
• Merchant is paid in local currency at a local financial institution.

• Payment has access to all the liquidity in the Ripple network.
• Similar model works for outbound payments.
• Each participant does one thing.


XRP
What is it for?

Characteristics:
• XRP can be transferred between any two accounts, no transfer fee.
• XRP is a unique asset in the Ripple system:
- No issuer, no counterparty.
- Needed for transaction fees, account creation, and reserves.
• The easiest way to make an asset liquid is probably to make it liquid to and from XRP:
- Other assets have multiple issuers.
- Other assets are likely to be regional.
- XRP is a bridge.
• If assets are liquid to XRP, you can hold XRP if you do not know what asset you will need:
- Assuming price is reasonably stable.


Conclusion
The Internet works. Shipping works. Payments are broken.

Ripple completes commerce
• Do what you do best.
• Everything works together.

- Currencies don‟t matter.
- Locations don‟t matter.
- Institutions don‟t matter.


Conclusion
What does Ripple offer?
• Backed by Ripple Labs.
• Fully open source, ISC license.
• For everyone.
• Nearly instantaneous, nearly free transactions.
• Receive, pay, and hold the currency of your choice.
• Direct access to market makers
• Irreversible payments.


Any questions?


About Me
Stefan Thomas
CTO, Ripple Labs

Previous:

Bitcoin Scripts
A simple stack machine.

Outputs and inputs connect

Bitcoin Scripts

Outputs and inputs connect
•

Transaction outputs verify the state of the stack

•

Transaction inputs need to set it up

•

If it returns true, the input is valid.

•

Surprisingly powerful!

Bitcoin Scripts

Limitations
•

Limited set of opcodes

•

No ability to reference external data

•

No concept of accounts

Contracts
A distributed Turing machine.

Consensus for your own apps
•

Contracts use arbitrary x86 code

•

Ledger is a generic key/value store

Escrow
Basic example.

Two parties transacting with mediator

Mediator should only be able to send funds to one of the parties, but not to herself.

Escrow
A basic example.

2 of 3 multisig in Bitcoin
2 <K1> <K2> <K3> 3 CHECKMULTISIGVERIFY

Escrow
A basic example.

2 of 3 multisig in Ripple
if (check_multisig(2, 3, payload[“sigs”], local[“keys”]))
send_funds(payload[“dest”]);

Escrow
A basic example.

Someone has to actually implement check_multisig…
function check_multisig(int n, int m, Object sigs, Object keys)
{
int valid_sigs = 0;
for (int i = 0; i < m; i++)
if (verify_ecdsa_sig(sigs[i], keys[i])) valid_sigs++;
return valid_sigs >= n;
}

It‟s a contract!

Escrow
A basic example.

Code duplication?

•

Contracts can link to other contracts as libraries

Escrow
Basic example.

What about verify_ecdsa_sig?
•

Compiled as a contract – and so is OpenSSL.

•

“It‟s contracts all the way down.”

•

All pure processing functions are fully sandboxed
 Minimal trusted code base (TCB)

Escrow
Basic example.

And what about send_funds?
•

A contract generates a static piece of data called the “agenda”.
SEND_CONTRACT_FUNDS_ALL [destination_account]

•

Think of it like an SQL query.
BEGIN TRANSACTION;
UPDATE accounts SET balance = balance +
(SELECT balance FROM contract_accounts WHERE contract_id = ?)
WHERE account = ?;
UPDATE contract_accounts SET balance = 0 WHERE contract_id = ?;
COMMIT;

Details
We skipped a lot of stuff.

Some more notes on how it all works
•

Contracts can hold funds

•

For KYC and other purposes contracts will have an “owner” account

•

Contracts can delete themselves

•

Contracts can write to hashtables based on their namespace

•

Contracts can read any entry in the ledger

Subscriptions
This is a bit more interesting.

Let‟s ramp things up a bit!
•

I want to have a contract that says:
“You can take up to 10 USD/Bitstamp out of my account per month.”

Microgateways
Ok, now we‟re starting to talk craziness.

Goal: Can we get PayPal support without… PayPal support?
*rolls up sleeves*

Microgateways

Contracts managing peer-to-peer transactions
•

Hypothetical IOU worth 1 USD: USD/M

•

I can now trade this IOU with full Ripple functionality:

–

Buy them on PayPal after going through KYC

–

Redeem them on PayPal with a 120 day escrow

–

All managed by Ripple contracts and SSL session proofs

Microgateways

SSL proofs
1.

Do an SSL session through a proxy

–

Proxy witnesses data stream (does not have access to contents)

–

PayPal‟s certificate shows up in initial handshake

2.

Submit SSL log and witness signature to contract

3.

Profit?

Microgateways
Ok, now we‟re starting to talk crazy.

Problem: How are these IOUs issued?
•

Only requirement: It must cost at least 1 USD to create 1 USD/M

•

“To issue 1 USD/M, you must send 1.05 USD to one of these charities.”

Disclaimer:

•

SSL proofs are a bit weak for this: They‟re worst of (counterparty, witness)

•

There might be a better way to provably destroy dollars!

Ideally: Only need to trust Fed.

•

But: Good enough.

Microgateways

Bigger problem: How are these IOUs redeemed?!
•

We want the value of the asset to track USD as much as possible.

•

If there are too few USD/M, no problem, people can issue.

•

But what if there are too many?

Microgateways

IOU inflation
•

Two main options:

–

If underlying asset is inflationary: Do nothing

–

If underlying asset is deflationary: Add demurrage to IOUs

Microgateways

Let‟s recap
•

The price of 10 USD/M will be between:
0 USD (if there is no one wanting to deposit funds)

10 USD + whatever the real transaction costs of depositing are

•

Good enough to get money in+out

•

But you‟d probably rather hold XRP or BTC

Autonomous Agents
He‟s lost it.

If code can own money…
•

Agents need somewhere to run.

–

–

Hosted autonomous agents (hosting risk)

–

•

Physical autonomous agents (e.g. self-driving cars)

Distributed autonomous agents (first time possible with Ripple)

And they need to hold funds.

Autonomous Agents
He‟s lost it.

… fun things happen.
•

Evolutionary model:

–

Agents can outsource improvements.

–

Hire somebody with a reputation for making better agents

–

Child agents start with a birth loan

–

Agents are “mindless capital”

Capital contracts
Putting it all together.

An alternative to the evolutionary model
•

Developers write agents and publish them

•

Investors fund them

•

Can be as flexible or rigid as needed

We’re Hiring!
ripple.com/jobs - Inquire with jobs@ripple.com
Business Development

Product

• VP of Financial Services

• Integration Engineer

• VP of Emerging Markets

• Product Manager of Platform

Software Development

• Technical Writer

• Sr. Javascript Engineer

• UX Product Designer

• Lead Android Developer
• Data Analyst

Ripple Developer Conference 2013 at Money2020

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