More to read.
“…A much greater point of criticism, however, is the XRP itself. The currency exists inside the Ripple network for two main purposes. First, it is the only currency in the Ripple network that does not require trust to send. Without XRP, if there was no “trust path” between A and B, there would be no way for A to send B any money. With XRP, the path can consist of exchanges between the desired currency and XRP at the ends and a trust-free XRP transfer in the middle. Second, like Bitcoin, Ripple uses transaction fees to limit malicious users’ ability to pollute the blockchain, and XRP is a neutral currency that these fees can be paid in. However, the XRP has one major problem: Ripple Labs, the parent company behind Ripple, owns all 100 billion XRP units that will ever exist, and it only plans to distribute a part of them to the community – the rest will go to early investors and the company’s founders. When questioned about this at the Bitcoin conference in San Jose, CEO Chris Larsen simply replied that the company chose this distribution model to better attract top-quality Silicon Valley talent and investment – hardly a satisfying argument to those who believe that the main problems with the current financial system are inequality and greed.The last major criticism, of course, is the argument that Ripple is centralized. Ripple has claimed to be open source from the moment it was publicly released, but in practice for the past year only the web client has been open. Thus, the Ripple network was entirely controlled by Ripple Labs, allowing the company to modify parts of the Ripple protocol at will – at one point, for example, Ripple reduced the minimum balance for a Ripple account from 200 XRP to 50 XRP, and was able to do this without consulting anyone at all. Ripple Labs developers continued to promise that they would open-source the code eventually, but nothing happened. As time wore on, many Ripple users began to lose faith in Ripple Labs’s intentions, and the value of the XRP tanked; by the beginning of September, the XRP was down 75% from its peak…”