Is Ripple suffering from the same “inequality syndrome” as Bitcoin?

Comments on the following critique would be welcome:

“The Ripple system is really interesting, but on one point I can’t help thinking part of it is a great scheme to make the founders (and OpenCoin) ridiculously rich. The reason that makes me wonder is that 100 billion XRP were initially created, and of these 20 billion are kept by the founders and 80 billion were given to OpenCoin (from their wiki). OpenCoin plans to give away some XRP, and sell some XRP, but it’s not clear in what proportions or how much. No new XRP will ever be created, and the value of XRP will increase gradually as more people demand it for transactions (and XRP is the native currency of Ripple and will be the most convenient transaction medium inside Ripple). XRP also have intrinsic value in that they are strictly necessary to perform transactions, and because XRP used for transactions are destroyed the total amount of XRP in the system will decrease steadily.

So we have a system where the founders and OpenCoin have control over almost all purchasing power. Moreover, because of this, they can keep exchange rates of XRP as high as they like by keeping supply low. If Ripple would take off and be widely adopted, the founders and OpenCoin would get unimaginably rich because of the big shares in the fiat currency they created.

It makes me think of the famous quote: “Give me control over a nation’s currency and I care not who makes its laws.” It doesn’t apply in full because the founders and OpenCoin won’t create more currency, but owning all currency from the beginning will have the same effect over the foreseeable future.”

4 Comments Is Ripple suffering from the same “inequality syndrome” as Bitcoin?

  1. AvatarMatthew Slater

    Yes, ripple suffers from this same problem, but it is more obvious. Bitcoin is somewhat democratic in that (future) bitcoins can be mined by anyone, but Ripples are allocated in a non-democratic, non-accountable way.
    We observe that in practice the early miners of Bitcoin are releasing new coins into circulation in order, probably to maximise their profit rather than for the benefit and balance of the bitcoin economy. And we should be aware that the 100 Bn ripples is similarly inelastic and many are held back until they are deemed valuable enough to sell.
    While I regard this mechanism is a valid and serious criticism of both systems, I don’t think it is a killer argument. Both currencies have much to offer the world, despite this arguably inevitable type of manipulation.
    Also, with the prevailing capitalist & free market logic, few people are objecting to entrepreneurs who invest resources in wildly speculative and innovative ideas, from becoming stinking rich.

  2. AvatarFabio Cecin

    Scarce currency (an oxymoron, really) is a moronic idea. It is based on the idea that we’re fundamentally separate “economic agents” competing for finite things.

    Ripple and Bitcoin are proxies to corporate/government fiat currency — both scarce — in the same way that corporate/government fiat currency is a proxy for controlling people through the fundamental ideas of separate agents competing for finite property.

    Ripple and Bitcoin are about making the founders and early adopters (the controllers) “rich” in government/corporate fiat currency in the same sense that the founders and early adopters (the controllers) “rich” in power over people who are bound to a frame of mind where they believe we are destined to forever be separate economic agents competing to dominate each other, and therefore we need some kind of model that reflects this to serve as an arbiter.

    Amassing fiat currency to become “rich” — a “winner” in that social ranking system — is an illusion. The more government/corporate fiat currency you accumulate, the poorer you get in a very real sense. Bitcoin and Ripple just create an illusion within an illusion. The discussion of whether the founders want to become “rich” in the sense of just amassing points in the government/corporate fiat currency game and are using Ripple and Bitcoin as “fronts,” or whether they want to become “rich” in the Ripple and Bitcoin systems, is ultimately irrelevant. That they are getting some sort of upper hand within the games they’re creating and that people who identify in any way with these systems are suckers is without question.

    What IS ultimately relevant is: when will people realize that the basis for all these variants of the same control games is invalid, obsolete? If we do want to play games, what about one of the newer ones? What about mutual credit systems? What about self-issued credit? What about time banks, personal promises, etc.? Why stick to overcomplicated systems who emulate stupid, unnecessary metaphors of scarcity?

  3. AvatarSepp Hasslberger

    I feel that the critique is justified, and that Ripple has in fact been taken over by an outfit calling itself, which is part of the Bitcoin universe.

    Ripple started out a a clean effort to enable decentralized exchange through trusted peers. The developer of Ripple, Ryan Fugger, did not have time or resources to invest in really bringing this to successful conclusion. So it happened that he, at some point, was ready to leave further development to others.

    In came which took over the unfinished protocol and changed it, instituting the XRP currency, but doing so in a very similar way as Bitcoin is arranged, i.e. with a total number of currency units created, which will in time appreciate in value. The vast majority of those XRP units is held by those who issued them in the first place. Since XRP is necessary to run a Ripple account, we have what looks like a scheme where early adopters get rich like Bitcoin. Only this one is worse, it’s not the early adopters but the creators of XRP that dream of fantastic riches, in case Ripple really takes off.

    This affects the current server implementation of Ripple on but not the actual program, which has been and can be forked by any programmer.

    Opencoin Inc looks like a shady outfit. The name they adopted was actually taken much earlier by a legitimate effort to create an open source digital cash, which is

    The above link is to a statement by that they have nothing to do with Opencoin Inc

    Someone also put up a website to expose the scam that Ripple has become since the takeover by the Bitcoin people.

    That said, this could be a temporary glitch. It does not invalidate the earlier effort to make a legitimate software that allows distributed transfers of currencies. Developers are working on other implementations of Ripple. There still is hope for progress in Ripple space, although in my opinion not as long as Opencoin Inc is running the show…

  4. AvatarMike Riddell

    Already the knives are out for Ripple? Fair enough – reading the above i can understand why.

    I think for any alternative currency to get real traction, it has to create SHARED VALUE, and that value that is created, has to be re-distributed to its producers in direct proportion to the amount of contribution made.

    What that boils down to is the need for a standard measure of contribution: what does contribution to the common good look like? How can it be recorded?

    Obviously, distribution of the currency must be decentralised, but how then is the currency’s value protected from people who might issue the currency without making any contribution?

    Time and time-banks offer the answer. Contribution measured by the hour, recorded in an individual’s account that is connected to a network that recognises and values the reputation of the individual that has made the contribution. I think some sort of social status/social media/game would work well here.

    But fundamentally, if we want to change consumer behaviour then we have to recognise the role that consumer-facing brands play, otherwise we will never get mass-participation. Brands and business have a part to play in making the transition from a consumer based economy to a conservation based economy.

    that requires new ways of defining and measuring conservation (contribution to the common good?) so that individuals and businesses (and governments) know exactly what good looks like.

    Don’t forget that businesses want our business, and we can buycott when we feel they aren’t making a fair contribution in terms of corporate tax (which helps the commons clean up the mess that they make), so what they want is a means to evidence their contribution. A common currency would do that if it’s issuance was tightly controlled AND decentralised. If it isn’t, it won’t be worth holding.

    More on this later.

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