How is Ripple NOT a Bitcoin Killer?

Let's talk about the elephant in the room. 

I get the impression that those behind Ripple are trying to be polite when they say that Ripple won't kill Bitcoin. If a system lets you send any currency of your choosing to anyone else for a very tiny fee, or even convert it to another currency on a peer-to-peer exchange, how could that possibly not disrupt Bitcoin?

Most of Ripple's critics are focusing on the "currency" used by Ripple, called "Ripples," (XRP) that protects the network from spam. The point of Ripples is to ensure that transactions have a cost, albeit a very tiny one. If that was not the case, the network would be overwhelmed by millions of spam transactions.

From the wiki: 

The ripple founders created the initial ripple ledger with 100 billion XRP. The founders gifted a for profit company called Opencoin 80 billion XRP. Opencoin intends to give away over 50 billion XRP. The remainder will be used to fund Opencoin operations, which include contributing code to the open source network and promoting the network.

Even if Opencoin should close, the ripple network will continue. Because the ripple is a P2P network, it is not operated by Opencoin but by the combined efforts of all the computers running the ripple server software. The ripple network can not be shut down without shutting down the entire Internet.

As of yesterday, OpenCoin has been giving away 50,000 XRP to everyone who replies to this thread, just as was promised in the wiki. They're trying to grease the wheels of Ripple to get people to use the system. There are 300+ replies in that thread; that's 15,000,000 XRP and counting. You can actually connect to the freenode network on IRC, go to the #ripple-watch channel and watch the distribution live.

Regarding Ripple vs. Bitcoin in terms of anonymity, Ripple does a good job, probably good enough for most purposes. It's possible that Bitcoin could hang on as the currency-of-choice for those wishing to operate in the black market, but in that scenario the exchanges would run the risk of becoming targeted by governments, and if they were to be shut down, Bitcoin would be crippled.

Remember, Ripple isn't about the XRPs; it's about providing a service that is supposedly the reason why we're all Bitcoin fans in the first place: it facilitates financial transactions outside of traditional banking networks. Sure, XRPs will probably increase in value as Ripple increases in popularity, and yes there might be an opportunity there, but that is a secondary consequence, and primarily benefits the founders. It's a benefit that they will well deserve, should the system work as advertised.

Posted in: ripple