1

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:

  1. 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.
  2. 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.
  3. 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?

Related questions:

closed as primarily opinion-based by cdecker, Stephen Gornick, Dr.Haribo, Colin Dean, Salvador Dali Nov 24 '13 at 21:21

Many good questions generate some degree of opinion based on expert experience, but answers to this question will tend to be almost entirely based on opinions, rather than facts, references, or specific expertise. If this question can be reworded to fit the rules in the help center, please edit the question.

4

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.

That's probably true for people who have no real urgent use case. But what about users who need to make international payments such as remittances? But largely I agree with you, pursuing users directly is not a good adoption strategy this early.

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.

The good thing about chicken-egg problems is that if you get one, you get the other for free. So when adoption is blocked by a chicken-egg problem, you pick the side of the problem that's easier to solve and work on that. Then the problem turns into something that drives adoption.

So what's the wedge into that problem? Well, businesses can accept payments through Ripple whether or not their customers send payments through Ripple directly, and customers can make payments through Ripple whether or not the businesses accept Ripple payments directly. The obvious example is the Bitcoin outbound bridge which lets Ripple users make payments to merchants that accept Bitcoins whether or not those merchants adopt Ripple. Similar bridges can be constructed in the inbound direction and from conventional payment systems.

There are numerous adoption strategies that don't require getting users directly but where Ripple is used as a "back end" payment rail and remains invisible to users.

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.

Community/social credit is not expected to be a realistic use case for Ripple for some time. It's reasonable to expect that the initial adoption will be driven primarily by assets issued by gateways, possibly even by business-to-business transactions using Ripple as a back end to provide irreversible, high-speed, cross-currency settlements.

Not the answer you're looking for? Browse other questions tagged or ask your own question.