When you open an account with a traditional bank, the bank will hold funds on your behalf, accepting deposits and honoring withdrawal requests. However, there isn’t a box in which your particular funds are stored. Instead, your bank account is like an IOU — when you make a deposit, your funds go into the general pool, and the bank keeps track of how much it owes you. Later on, you can make a withdrawal and the funds come out of that general pool, again updating your account balance.
In the same way, a Ripple issuer is able to hold funds on your behalf, and you are able to make use of those funds whenever you need them. An issuer is needed whenever you want to receive payments in a currency other than XRP.
Just like you have to trust the bank to keep your money safe, you need to trust a Ripple issuer to hold your funds. By extending trust to an issuer, you are telling the Ripple system that you trust that issuer to hold a certain amount of funds in a given currency for later redemption. This is done by setting up a trust line within the Ripple system.
Note that when you set up a trust line, you really are trusting that issuer to hold your funds in that currency. If the issuer reneges, for example because it goes out of business or decides not to honor a withdrawal request, then you can lose up the value of your trust line.
When setting up a trust line, make sure that you enter the appropriate Ripple address for the issuer. Some issuers will have multiple Ripple addresses (for example, in the form of a hot wallet); make sure you use the address the issuer told you to trust, and that you trust the address for a currency that the issuer supports.
You can adjust or remove a trust line at any stage. Note that if the issuer is holding funds on your behalf and you reduce a trust line, the funds will not be affected, but you will be unable to receive further payments unless there is sufficient trust available. If you reduce your trust line to zero and have no funds in that currency and issuer, the trust line will be removed.
Multiple Trust Lines for the Same Currency
If you trust multiple issuers for the same currency, and have funds in that currency held by one of those issuers, the Ripple system considers that you trust both of these issuers equally, and may automatically swap your currency in one of those issuers for the equivalent amount held by another issuer. This won’t affect the total amount of the currency that you have, but that currency may swap from one issuer to another.
Ripple does this to fulfill payment requests — you are effectively providing liquidity between those two issuers for that currency. For example, if you have $US 100 issued by XYZ, and trust both XYZ and ABC for $US, the Ripple system may take your $US100 and give it to someone else, swapping your $US from XYZ to ABC to fulfill a request for $US/XYZ. You will still have $US 100, but it is now held by issuer ABC rather than issuer XYZ.
The Ripple client will warn you if you attempt to set up multiple trust lines for the same currency. Obviously, you should trust all the issuers for who you create a trust line.
It would be helpful to show some examples of trust lines. Can a bank be a trust and what would that look like?
I can't understand all that. Perhaps because not translated in french... Where do i find "trusts", how could i trust someone i do not know ? Why may i send currencies to a trust instead of keeping it in a wallet ? Did i miss something ?
Looks like Anna Tong is unable to explain things. She just gives examples of what "some people" may or may not do. She says, for example, "the easiest way". Well, is there a standard way; not easiest, not hardest, just standard routine? I am already spend hours for trying to understand how to put cash into my wallet, but so far in vain. After reading this paper regarding "trust lines", I see only some hints and analogies. No definition, no procedure can be found here
Is anybody here aware about more reliable, better developed sources of information. maybe some tutorials, or webinars?
thanks
Auth, I spent a while this morning trying to find better information as well, only to find there are not clear distinct procedures about trust lines either.
I think what is not made clear especially is what exactly are the consequences of trusting someone. If this could be addressed it would be helpful.
I think me, Auth and others here understand the basic premise behind ripple linking different units of account, bridging finance like email, but we don't get how the trust line works or how potentially dangerous it is, and as such we don't have enough confidence to continue.
I realized it's still a beta, but it should be easy to use the product.
Suggest JustCoin.com they can exchange usd, eur to bitcoin and then to xrp.