How can OpenCoin be profitable once they give away their code?

[misterbigg]

Fact: OpenCoin is a private, for-profit business

Fact: OpenCoin's list of employees is scret

Fact: OpenCoin's investors are secret

Fact: OpenCoin has ongoing expenses

Fact: OpenCoin controls all 100 billion of the initial XRP distribution

Theory: OpenCoin will monetize their invention by controlling the distribution of XRP

Open question:

After the Ripple software has been published, proven to function, and open sourced, how will OpenCoin monetize its invention?

Specifically, what prevents the community from creating a hard fork?

If the answer is nothing, are we expected to believe that 2+ years of investment and development by multiple individuals took place for purely altruistic reason with the possibility of not seeing a return due to a fork?

What information are we missing?

[HostFat]

"Trust" is the answer.

It's not enough to have all the source code to make a working hard fork good for the community.
You can see this on every new currency born after Bitcoin.

There are some big and trustful names behind Ripple.
Jed McCaleb as example was well known before making the Mtgox exchanger.
He has a very good knowledge about cryptography/math/p2p algorithm, and he had for sure a big address book of other big names that he trusts.
So Ripple has probably one of best team of cryptographers around the web now. (Bitcoin-qt is another one, Freenet, Tor ...)

As I remember, public speaking, Jed hasn't scammed anyone with his past projects.

So, if there were a 1:1 clone of Ripple, many people will chose the "original".
The ripple-clone need to make/show some very good features to open his own market, good luck

[Sunny King]

Running a fork to compete with ripple is not so simple as you would think.

It's a lot of effort. If you make a fork with 0% premine, what exactly are you getting in return? It's a lot of risk for the fork maintainer as well. Plus you do not have brand name of ripple. Once ripple network gains steam it's hard to compete for the forks, just like bitcoin forks unable to compete with bitcoin, due to its brand name and adoption.

On the other hand if you claim some premine, then why do users trust you instead of the original ripple developers, who made the system and deserve the share with their effort?

On the other hand it's completely true that forks can be a threat to OpenCoin. Look where I am at, novacoin forked ppcoin and within a week it has more than ppcoin's market cap (although this is due to ppcoin's low adoption currently). It's a delicate subject that I am sure OpenCoin is aware of what's at stake. They likely would make sure that they are in a overwhelmingly advantageous position before releasing the server source code.

[Beepbop]

Trust and also intellectual property law? You would be free to make a fork, but if Ripple owns the trademark and the websites, you can't call it Ripple.

Another thing that prevents forking is the very basis of the system: IOUs. Sure, you could make a competing fork, but the IOUs in the existing system would still be valid. More forks would just complicate things for people trying to keep track of what they owe. This provides some inertia that makes an incentive for only one Ripple to exist. Now, that doesn't need to be the first incarnation, but the first incarnation certainly has a head start in brand name recognition, etc. It also gives incentive for merging forks in the future. Everyone could start their own Ripple fork, and then work to merge them in the future. Since almost nothing is truly priced in Bitcoin, Bitcoin lacks that kind of inertia.

And just like Bitcoin it has people invested in it. However, unlike Bitcoin investing, Ripple isn't just a way to play "hot potato" with bits.

So to sum up:
- Brand name
- Existing investors
- A body of IOUs that have value no matter how many other forks exist. <- This is the main advantage over Bitcoin, so believers in Ripple had better start using it.

[misterbigg]

They likely would make sure that they are in a overwhelmingly advantageous position before releasing the server source code.

This. Which is why I take umbrage that OpenCoin's stated purpose for remaining closed source is to "fine tune the implementation." The deception surrounding Ripple is one of it's most disturbing qualities.

[Sunny King]

I wouldn't read too much into it, code not being 100% ready could certainly be part of the reasons. Even if they decide to withhold the source code for a year or two it's an understandable business decision.

[Beepbop]

If it's based on a license that requires releasing the source to all who get the binary, they'll have no choice to release the source to everyone who has the binary and asks for it.

[Sunny King]

If it's based on a license that requires releasing the source to all who get the binary, they'll have no choice to release the source to everyone who has the binary and asks for it.

As far as I know, MIT/X11 (the license bitcoin uses) has no such requirement.

[duckbillp]

I wouldn't read too much into it, code not being 100% ready could certainly be part of the reasons. Even if they decide to withhold the source code for a year or two it's an understandable business decision.

A year or two?! That could hardly be called an open source project. I hope people stay cautious and don't invest their money in it at least until the source code is released, and until we know how decentralised Ripple really is.

[misterbigg]

They likely would make sure that they are in a overwhelmingly advantageous position before releasing the server source code.

This is the correct answer confirmed by sources, therefore I am locking this thread and preparing a new comprehensive summary of what we know.