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In Bitcoin, fees are earned by the miners. Who earns the transaction fees in Ripple?

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up vote 8 down vote accepted

The transaction fees in Ripple are simply destroyed. There is no mining.

We had to use ripples because we couldn't use dollars, both because dollars in Ripple can only be represented as debt (Who would owe them to the system? Who would they go to?) and because Ripple is intended to be cross-currency (How would you manage exchange rates?).

The beauty of ripples is that the network can destroy them and they require no central authority. In the future, if ripples become unusually scarce or plentiful, the XRP cost of transactions can be adjusted by consensus.

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"... the XRP cost of transactions can be adjusted by consensus." Is this the same consensus process that is used to process transactions? Exactly the same, or some variation of it? –  Manish Apr 24 '13 at 21:03
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@Manish: It's the same except that there's an extra step. Validators publish (in selected validations) what they want the fee to be. Then validators can introduce a pseudo-transaction into the transaction set that changes the fee. If the pseudo-transaction makes it into the consensus set, the pseudo-transaction is applied and the fee changes. The same process is used for changing reserve levels, and an almost identical process is used for enabling new features or making rules changes. –  David Schwartz Apr 24 '13 at 21:10
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Technically XRPs have no counter-party risk as long as no single entity (including OpenCoin, Inc) does not have enough of them to corner the market. Perhaps a better name for this would be Systemic Risk ?

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