So begins the wave of newbs who don't understand economics? There'll be a lot more coming, may as well practice before the flood.

Whatever it's worth to a business to gain a new customer. So probably 200 XRP will be significant. If each XRP is one cent, the founders keep half a billion dollars for themselves and centrally plan the distribution of the other half. And that's just the valuation XRP could have for one purpose. In reality, businesses will be competing in their bids for XRP with many other parties.

In launching any new currency the founders can always choose to enrich themselves. What prevents them from doing so is that people find it unjust or can't really believe in it ideologically or philosophically, so they don't support it.

However, conditions are different now. People already believe in cryptocurrencies, and OC has a lot of marketing power behind it. The more people trust the idea of cryptocurrencies and the more they can be swayed by marketing and/or deception, the bigger a cut the founders can justify taking for themselves. I just happen to think this Ripple implementation has been way too greedy, way too closed, way too central-bank-like, and way too deceptive ("XRP=chits, stamps") to be adopted despite all the marketing power. I could be wrong.

Hence XRP are valuable.

If there is no concern about running out, people won't mind giving up their excess XRP for a pittance, meaning spammers can acquire those XRP and use them to spam for a pittance as well. It's not like there is a happy medium. Pick any actual price and it becomes obvious. If XRP cost $0.000001 on the market that's a million spams for a dollar - too cheap to prevent spam. Hence spammers will bid up the price until it is no longer worth it for them. This works the same way even if there are a quadrillion XRP.

Any way you slice it, 1 XRP represents the ability to spam one time, and hence will tend toward the market price of however much the ability to spam once is worth to a spammer (as a bare minimum).

This means XRP are scarce, which means they have a market value. Moreover, OC retains giant sway over that value.

So the final word is that they do have value and are scarce (otherwise cannot be traded on a market).

That last statement doesn't jive with OpenCoin's claim that they will use XRP to pay their staff. If it were really only an IOU  from the company, you're saying that any gateway can also issue XRP?

Once and for all: at any given time XRP are either easy to obtain in large quantities or hard to obtain in large quantities (i.e., scarce). Can the OCRipple proponents choose one option and stick to it?

You're engaging in doublethink, believing two mutually contradicting conclusions at the same time. If the supply is increased enough not to be scarce anymore, it must for the very same reason become useless for spam prevention. There is simply no way around this.

Thus the claim that XRP are just worthless chits for spam prevention is either misguided or deliberately deceptive.

If there is no concern about running out, this cannot serve as spam prevention. You can't have it both ways.

Yes, no one can get scammed as long as OpenCoin doesn't secretly try to profit by selling into the open market, but it is not a matter of being scammed; it is a matter of whether people will want to support such a centrally controlled currency. If they don't, this co-opting of Ripple could easily set the project back a few years. That is irking.

OC's Ripple is looking more and more like another "pre-mined" alt-coin, but this time with corporate backing and a big, sneaky PR campaign.

They are intended to have near zero value, but they are keeping 20% to pay the devs? PR101: Pick a story and stick to it!

It's not a matter of what is just or unjust to us. It's a matter of what the average person will think. If Satoshi had 10.5 million bitcoins and left miners to mine the rest (or worse, allocated them at his own discretion), do you realize how many people wouldn't dare touch Bitcoin? It would destroy its legitimacy. Sure, if it succeeded in spite of that, Satoshi would be the most powerful man in the world and it might be a great world, but the problem is getting there. People only invest in Bitcoin because they can believe in it. Why would anyone invest in Ripple, except a few people who will try any old cryptocoin for kicks or random growth possibilities?

If they succeed I'll be jealous that they are wealthy, but happy that Ripple exists. A company is entitled to as much profit as it can possibly get. The problem is that this is doomed to fail because people won't get on board with such a ridiculously unfair allocation. They're killing Ripple in the cradle in a misguided attempt to turn it into a business by taking advantage of the open-source cryptocurrency community. "Open" = open source, "Coin" is supposed to make you think of Bitcoin. It's ridiculously brazen.

But hey if they can get people to trust them by some super-PR then maybe they can bootstrap Ripple into existence. That would be wonderful. But this crew doesn't even seem to understand economics or even Bitcoin really, and the whole thing feels very opportunist and shady, so I am extremely skeptical they will get people to go along with it.

Well they can do whatever they want, but how many people are going to really get on board (and stay on) if they realize OC is keeping half the XRP market cap for itself? Half is just way too much. 1% or 0.1% might be agreeable, but half?? (And Soviet-style control over the rest, with a Communist-era breadline in the XRP giveaway thread.)  

Interesting lead.

The thing is, if people object to mining because it wastes electricity, they should object even more to having to fill out a CAPTCHA. Or if they don't, how about CAPTCHA-based mining? The problem with CAPTCHA is it is not an objective PoW unless audited by someone (in which case it is even more wasteful) or unless OpenCoin knows all the solutions in advance (which is unfair as they could automatically collect the dough).

To me the elephant in the room is that equitable distribution has been a problem for a long time, and it only finally found a solution in the form of PoW. PoW was a game-changer precisely because it was the only system to solve yhis hard problem of how to fairly divvy up currency units.  Barring another ingenious breakthrough as big as PoW, there's no reason to expect that anything besides PoW will be suitable for the task of distributing XRP.

OpenCoin calls this a hard problem and asks for suggestion on how to overcome it. Well unless someone can make that next big breakthrough, the only answer available is PoW. It seems to me very strange that anyone in the Bitcoin community wouldn't understand this. With the current level of technology, spending electricity is simply the price that must be paid to effect fair distribution. If that is unacceptable, the project will probably have to be reconsidered in some fundamental ways.

Since Bitcoin mining happens to serve a dual function, fair distribution AND auditing, the former is often overlooked. "Wasted" power is the price that needs to be paid for agreeable distribution. If people consider that too wasteful, then mining either has to be made to do something more useful as well, or a different method can be considered. But central planning of the money supply Bernanke-style is unacceptable. If no other method besides mining is viable, and people find mining too wasteful to participate in Ripple, then maybe Ripple needs to be reworked from the ground up.

Bitcoin was only made possible because of PoW. Why in the first place did anyone think that they could base a currency on something other than PoW? I mean sure, if you had a great idea that is even more ingenious than PoW that would be one thing, but simply giving it away? Damn right it's a hard problem, and Bitcoin has been the only way to solve it so far. Solving it without PoW would take something even more ingenious, not some random giveaway. Is OpenCoin's business model really based on the hope that a breakthrough more clever than PoW will be discovered in time?

Well it could just be a difference in vision. A profit-motivated launch helps speed adoption (as long as it doesn't damage trust), but if Ripple is to succeed you'd think even 1% of the entire market cap to the devs would be plenty. Or 1% may even make people too upset, but 50%? It's almost as if they're planning to cash out very early on.

1% to OpenCoin and the rest mined Bitcoin-style sounds like something I could possibly get behind IF open-source

What is the justification for OpenCoin's secrecy in the development of their Ripple implementation? OC is supposed to have superior dev support compared to Bitcoin, yet they're afraid of competition?

It looks like they're rather fond of a version where they get to control where the money goes (with "input" from the community), and they hope to keep it closed long enough that it has too much momentum to fork by the time they release the source (if ever). That way they keep control by keeping half the market cap and deciding how to distribute the other half. Is this not totally against the spirit of open-source? Am I missing something?

EDIT: Note this wouldn't make it a scam, since no one is being tricked into buying XRP from OpenCoin, but it does make it seem like the giveaway-half-and-keep-half "distribution" scheme is to be interpreted as, "Make us filthy rich and we'll bootstrap Ripple into viability." I'm not even sure this is a bad idea: it may be that this really is the fastest way, but I doubt it. It seems like an attempt to ride on Bitcoin's success, but it looks like one of the core reasons for Bitcoin's success has gone unnoticed: people knew they could trust it, or didn't have to trust it.