Upgrading from a LETS
If you already use a Local Exchange Trading System (LETS), this page will tell you how you and your community can upgrade from your current system to Ripple. This will allow you to get the same functionality you already had, plus a convenient set of tools for using and managing your accounts, plus a whole new world of peer-to-peer (p2p) finance.
How does Ripple relate to LETS?
Ripple can be thought of as a souped-up LETS, which engages its community's social trust network. As the FAQ says:
A more detailed essay explaining Ripple concepts for LETS users is available here.
The original inspiration for Ripple was LETS, a mutual credit system where users issue new money for each other when it's needed to make a transaction. In LETS, however, users issue new money on behalf of the entire community of users and are not made directly accountable for their decisions. Ripple was originally intended to be an alternative currency system where instead of a single communal LETS, each user would operate their own mini-LETS, which other users could subscribe to at their own peril. The trick then is to route payments through this potentially complicated network of personal LETS currencies...
Suppose Alice and Bob know and trust each other on Ripple, as do Bob and Carol. If Alice wants to buy something for $10 from Carol using Ripple, the system will find a path through Bob. The transaction works like this: Bob agrees to owe $10 to Carol, and Alice agrees to owe $10 to Bob. The end result is that Alice owes a total of $10, Carol is owed a total of $10, and Bob is even overall.
To make use of this Ripple payment, Carol might want to then buy something for $8 from David. The system finds that David is connected to Alice, who is connected to Bob, who is connected to Carol. The transaction goes: Alice agrees to owe $8 to David, Bob agrees to reduce Alice's previous $10 debt to $2, and Carol agrees to reduce Bob's $10 debt to $2 as well. Now Alice still owes a total of $10, $8 to David and $2 to Bob; Bob is even overall, owing $2 to Carol and being owed $2 by Alice; Carol has a positive overall balance of $2; and David has a balance of $8.
Interpersonal Ripple is in many ways an ideal. Instead of depending on labour-intensive legal frameworks to support formal institutional trust, interpersonal Ripple could build on existing informal trust relationships within communities. This should be both cheaper, and allow for a monetary system that better incorporates human and community values.
It would also be more democratic, as it would not depend on central authorities to regulate the money supply and in so doing direct the economy. Deciding when more money is needed for an entire nation involves not only a problem of data collection and analysis, but a whole set of value judgments, and the values of those making the judgments may not always agree with those of the citizenry. If everyone was responsible for issuing their own money, not only would the number of brains gathering and processing economic data multiply million-fold, the values underlying collective monetary policy would accurately reflect all participants in the economy.
Ripplepay is a functioning interpersonal Ripple system.
A community using LETS can upgrade by having the LETS organizer and every user create Ripplepay accounts, and then connecting each user to the central LETS account. This replicates existing LETS functionality in Ripplepay.
Users are then encouraged to connect among themselves, to extend the utility by intertwining their network more fully.
In practice, to get started migrating from LETS to Ripple, any LETS member can create a Ripplepay account and begin inviting other LETS members right away.
But Ripple's not local!
You're right, but in a way Ripple's even better than local -- it's super-local. LETS connect local members, although those members can still of course travel and interact outside of their locality. Ripple also connects local members, but goes one step farther by essentially localizing each member as an exchange system. To us, this seems to extend the local benefits of LETS, while enabling more powerful functionality. Think globally, act super-locally!