Once the reserve value comes down, the apparently high cost of having an account will be less, but consider that one person only needs to have one Ripple account in ones lifetime (plus any business accounts), while one would potentially conduct hundreds of thousands of transactions in ones lifetime. Now the transaction cost doesn't look so small next to having an account, does it?
Think of it like the early days of gMail right now, when you had to beg people for account referrals instead of just signing up.
How OpenCoin will monetize XRP
Vinnie: ...What's the OpenCoin business model?
Jed: ...we hold xrp and hopefully they gain value
They can't just sit around hoping. Then they would fail. The only sustainable way to make XRP worth something is that people use Ripple for actual IOU transactions, so they had better keep working to promote Ripple if they want that XRP to be worth something.
The other - unsustainable - way is that Bitcoiners speculate in XRP and nobody uses Ripple, but then the people who hold XRP also have an incentive to promote Ripple so that XRP becomes worth something to other people.
Just be aware that XRP in the end only is guaranteed to pay for Ripple services, and if Ripple fails it's worth 0.
* XRP is designed to function as a currency
The designers say so, and it can be used for buying and selling stuff in, but it's more like buying and selling in frequent flier miles or indeed non-denominated stamps. Look up Canadian Tire Money for example.
* XRP value is beyond a mere "stamp". People who believe they have trivial value because they are "just used to prevent spam" are misguided, and the founders have implied as such.
They are indeed like stamps, if you needed 200 stamps to have a mailbox. As the founders have indicated, they only prevent spam in the way that those who create useless transactions would have to pay the same transaction cost as those who conduct gainful transactions.
If people want to use their "mail service" to send bricks to themselves just for wasting resources, the transaction processors still get paid the same as if it was used to send gold or electronics. It brings up the transaction cost for those using the service for gainful transactions too, but that will only persist while the trolls are sending rocks in the mail. (Did you see my link about the whole building that was send by post in Utah?) But as long as the transaction processors get paid their market rates, they don't care if they're shipping rocks or ASICs.
* Since OpenCoin's business model is to "hold XRP and hope they appreciate", we know that no proposals for fully decentralized distribution (e.g. "proof of work") can possibly be taken seriously.
Agreed. XRP, rather than being a "proof of work" representing wasted electricity, are a "proof of work" representing both past work (that they made Ripple) and future work (will process your transactions in the future if Ripple still works). If people buy XRP to reward the Ripple creators, that's more like a donation or kickstarter, but if people buy XRP to use Ripple that's more like buying stamps or gift cards since they're redeemable for something.
Note that the users will still indirectly bear the cost of new account creation (and accompanying enrichment of the founders) through slightly higher prices passed on to them by merchants.
This is an astute observation. As people only need one Ripple account though, I think the reserve will need to come down after a while and merchants might just "give away" some XRP.
In the beginning, the trivial user of Ripple shouldn't have to even deal with XRP beyond the reserve - the payment gateways would be aquiring the required XRP (maybe with some special agreement with Ripple founders as you indicated) and just bake that transaction cost into the USD-denominated transaction costs that their customers see.
