to function as a store of value. As stated below: Bitcoin's supply is infinitely
.
A bad analogy would compare Bitcoin to voltage and Ripple to current.
so if the XRP's are not expected to increase in value, why is it that this is exactly what expectations i'm hearing from ppl who are rushing to get their hands on them? also giving them out for free encourages one to just hoard them in case they do skyrocket in value. after all, they didn't cost them anything. some Bitcoin miners otoh have to sell mined Bitcoins to pay for the costs of mining or the work they've performed. this encourages dissemination of the units.
Expectations don't necessarily translate into reality, and I don't expect them to here. Adoption will be the major driving factor here, as it is with Bitcoin. The difference is that without market competition for limited supply, the value is unlikely to rise much until the available units have been distributed and a steady turnover volume has been achieved. It's like try to keep a 100m rope taught with only a 1m arm span.
how do the validators get paid? what incentives do they have to set up servers and pay the costs? don't they, as well as OpenCoin, represent focal points of failure? the entire system depends on them.
Validators don't get paid. Each time a transaction occurs, the XRP used to facilitate the respective transfer is debited from the 100,000,000,000 unit ledger, making all remaining XRP worth slightly more than they were in relation to the entire supply.
For example, a transaction occurs and now there are 99,999,999,999 units remaining. Let's say that there are 80,000,000,000 XRP left after two years. The residual could conceivably be worth ~20% more than if there were 100,000,000,000 of them, because they're becoming more scarce. However, it's probable that there will be an extended delay in value increase due to the sheer volume of supply. For there to be real constraints on the units available, there would have to be a
lot of transactions occurring. That means a
lot of users.
Value will only rise when that supply limit becomes a practical constraint. However, like bitcoins, ripples are arbitrarily divisible. Therefore, the supply constraints will be balanced out to a large degree by progressively lower XRP-valued transfer costs. In effect, the BTC cost to conduct a Ripple transaction might
never change! It would only change in terms of XRP. In other words, if your wealth is within the Ripple system, it will only appreciate if it
remains within that system. Otherwise, it will be essentially the same value as when it entered, at least in terms of XRP valuation.
Bitcoin and Ripple divisibility:
Bitcoin's supply is infinitely
expandable; Ripple's supply is infinitely
renewable.
If Ripple becomes such a dominant network that it covers the vast majority of known financial structures, it is possible that XRP holders could be well rewarded in relation to other asset classes. That's a ways off, though. For now, as the situation exists, Bitcoin is
the cryptocurrency; it will act as the means of exchange, metric of value,
and store of value. Ripple is primarily suited as a means of exchange; if it remains small, it could become a MoV and SoV; if it becomes large, it would primarily be a MoE and MoV, but not a strong SoV.
