In order to reduce energy waste, instead of inspiring individuals to mine, all the current 100 billion XRPs were pre-mined/generated through some efficient way from the very beginning by Opencoin Company. This sounds like a reasonable method considering cost-efficiency and environmental issues; however coin mining is by far the fairest way to distribute mathematical currencies and contributes largely to the “decentralized” attribute of these currencies. With the lack of this mining process, the current ripple user faces difficulties to obtain XRPs in a relatively free and fair manner. Although Opencoin has promised that they will give away 50 billion free XRPs to public, but how to distribute them fairly has become a thorny issue.
The timing and the number of XRPs and recipients of each giveaway will directly affect the current market volume of XRP and thus influence its market price and the interests of the current ripple holders. Decentralization is one of the most important features which has contributed to the success of Bitcoin. Under the current Bitcoin mining system, nobody is able to get a large number of coins without pain; therefore it is relatively hard for one party to manipulate the market price. Unfortunately, unlike Bitcoin, users cannot obtain XRPs by competing in mining. The Opencoin Company controls all the pre-mined XRPs, and thus they have absolute control over the market price.
Obviously, The Opencoin Company is now experiencing the pain of XRP distribution. The current giveaway was a truly disappointing and confusing process for lots of ripple users. The biggest problem is the transparency of information. In the first version of the giveaway, an announcement posted on the official blog of ripple, 40000 users would benefit from this current giveaway, but within half hour Opencoin decreased the amount of users from 40000 to 25000 in the same blog without any notice nor explanations. Furthermore, two days before the giveaway, according to Chris Larsen co-founder and chief executive of OpenCoin, “The Company will soon begin giving away 2,000 Ripples each to about 40,000 people”.
http://blogs.wsj.com/moneybeat/2013/05/31/from-bitcoin-to-amazon-coins-a-guide-to-virtual-currencies/ But the amount has changed from 2000 to 1000 a mere two days later. Even worse, a fair amount of people received the “ripples for you” email on May 9th, telling them that they are eligible for the coming giveaway by the end of May, but nothing has happened till now, at the end of June. There was not even a proper response/explanation in the forum. All these irresponsible behaviors will make people start to lose confidence in the future of Ripple. Because, in this pre-mined structure, The Opencoin Company plays a very big role in the XRP market, any misbehavior would possibly cause a dramatic change in the market, not to mention the company’s reputation.
On one hand Opencoin has slowed down the free giveaway process, however on the other hand, they sold a large number of XRPs SECRETLY few month ago, assumed with a much lower price. This 200 million XRP secret deal directly caused the current crash of ripple price and damaged the interests of all current Ripple holders. As community users we can only buy XRPs at the current market price, but large investors are allowed buy XRP at a fixed future price secretly. And once Opencoin publishes or secretly sells a large amount of XRPs to some big investors, the asset values of the current holders will shrink directly. Because the big investors bought XRP at a lower price, which was set in advance, but can sell at the current market price once they get their coins. The market price would crash when too many XRPs come to the market all at once. Imagine what happened a couple of days ago, and all the current holders were robbed! Opencoin is playing the role of the Federal Reserve in the XRP system, and indeed they play the role to a T – printing billions of dollars to rob the rest of the world! Worst of the worst, Federal Reserve is regulated but Opencoin is not!
I was a big fan of Ripple, but I am starting to get extremely worried about the future of this community. Opencoin are not only unwilling to communicate with the public transparently, such as with this 200million secret deal, but are also inconsistent in their words and actions, such as this current incomplete giveaway. I personally feel Opencoin is not ready for the virtual coin market and they are not taking the individual user seriously enough!
However, I still believe Ripple could stand out and succeed if they are able to get and maintain a large number of active users. Technically no doubt ripple is a great product; however it is still centralized and is controlled by one company. Moreover this company has not given the public a persuasive answer in the past few months. They have made big mistakes in the XRP distribution and lost fairness in doing so.
People are watching, though only a few complain! But if Opencoin can’t keep its word and distribute the 50billion free XRPs equitably and transparently to the public, people will choose with their wallets. In that case the recent secret 200million deal and the reserved 50billion will become worthless eventually.
<Chinese version>
关于近期ripple崩盘的诸多思考
http://t.cn/zHeNdOz
