Now, I have been reading a lot about Ripple lately and here is something that still eludes me: For example Bitcoin has a clear early adopter advantage, which incentivices investments and helps build up a critical mass of people until the network effect sets in. Additionally, the Bitcoin system is designed to reward collaboration towards stability (mining rewards).
Ripple seems to have some problems here:
- It is hard to make out an early adopter advantage for users, except perhaps scoring a few Ripples to spend for free. After spending that money, there seems little advantage for users to stick around.
- There seems to be mostly a first mover advantage for businesses (see 1, 2). However, for most businesses this should be a chicken-egg problem, without customers there is no interest to implement, without usage opportunities there is no interest for customers.
- There is no strong incentive to do what is good for the network: While inactive users in the bitcoin network don't matter, should users in Ripple lose interest, their outstanding IOUs lose worth. So, not only do I have to trust that somebody is good for their money, but also that he will stay interested.
My question then is: How is Ripple supposed to attract enough interest to build a user base that propagates a network effect?