Is the otherwise promising Ripple set to become a great currency fraud? 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.

So is this nothing more than a smart fraud that's incredibly big in scope? Are there any indications that the supply of XRP will get some kind of fair distribution?
Opencoin plans to give away 50 billion XRP. It is actually in Opencoin's best interest to make this distribution as wide as possible as the system will only be successful if it can gain a critical mass of users. Giving away enough XRP to keep the system as cheap as possible for as many people as possible for as long as possible is the only strategy they believe will work.

A lot of people have suggested possible nefarious schemes and conspiracy theories around Ripple. But you have to remember, if the Ripple payment network doesn't become popular, nothing else matters. It is simply a better strategy to give away lots of XRP as fairly as possible to drive adoption. Not to mention, not doing what they said they would do would reduce confidence in the system.

Billions of XRP will be distributed as widely as possible. The system will be fully open source. There will be no central authorities. That's what's in the founder's best interests, that's what's in Opencoin's best interests, that's what Ripple was designed to be, and that's what Opencoin intends to do.

The founders get 20 billion XRP. OpenCoin gets 80 billion XRP -- 50 billion of which can be given away to promote widespread adoption. That's the deal that was struck.

Note: I'm an employee of Opencoin and one of the architects of the Ripple payment system. I am speaking only for myself.