Problem
Ripple aims to be a decentralized system. But as long as a significant portion of the XRPs is handled by a single entity, there's no way the system can work. Currently, on the 100 billions XRPs, 50% will be given through give away operations, 30% are kept by OpenCoin to fund itself and 20% are kept by Ripple's founder.
There's no way a sustainable economy could grow if, at best, 50% of that economy is in the hand of the same people (OpenCoin and founders). Even 10% is completely crazy. Worst: even if, later, the founder and OpenCoin spend most of their XRP to try to bootstrap Ripple, there's no way they could prove it. Ripple will forever lives under the threat that someone might have 10% or 20% of the entire economy.
If all the technical problems are solved (opensourcing the server, publication of mathematical demonstrations, etc), it would be a shame that Ripple never take off only because the founders were too gready. It is also in their best interest that Ripple becomes popular. It's better for them to hold 0.1% of a 100 mililons $ economy than 10% of a non-existent economy.
Proposed Solution
Bitcoin economy was, at the start, heavily boosted by the faucet. Such a faucet should be implemented for XRPs too. The faucet will give, for free, a given amount of XRPs but only once per IP and once per Ripple address. Sure, it is possible to cheat but I believe that it cannot be done on a large scale if protected by a captcha. This will allows everyone to try Ripple. Some will manage to get 10 or 100 times from the faucet. So what ?
Another thing is that, once you've got your free dose from the faucet, you could still get XRPs by buying them for a fixed price or by giving a cupon code. This cupon code will enable OpenCoin to still make some giveaways. Instead of asking for a Ripple address, they will send cupon codes to people. The fixed price is very important: it ensures that, during the bootstraping, there's always a cheap way of buying XRPs and using the network. It also discourages early speculation.
The faucet will also be transparent: the total money in it will be known and displayed publically. At the launch, the faucet will be loaded with 99% of all the ripples. It will be very easy to check at the start that there's well 9,900 millions of XRPs in the faucet. Transactions will be displayed publically so anybody can check for potential problem.
Details
1. Why 99%?
The more goes on the faucet, the better. I would say that 99% is the bare minimal. Less than that leaves too much risks for a centralization. And, as said previously, the risk will *always* stay. Nobody would ever be able to proove that the risk fades away.
2. What should be the fixed price of a XRPs?
It could be a fixed price in bitcoins, strongly linking Ripple with the Bitcoin economy or a fixed price in any fiat currency. But then, the question is: which fiat currency to choose? [1] Both solution should then be discussed openly. The price should be low enough so that it discourages cheating but high enough so nobody can buy a significant portion of the market.
Having a low fixed price also discourage the use of XRPs as a hoarding money but reinforces the anti-spam goal. It is in the philosophy of XRPs (at least as described on the wiki).
3. How much should the faucet gives?
Currently, OpenCoin is sending 40,000XRPs to individuals. It means that the faucet will be able to make nearly 250,000 donations (minus the sales). If the price of XRPs should be fixed, the free faucet could decides to give less and less. This will encourage early adopters to try the system.
Questions
1. The faucet will ultimately dry out.
That's the goal. When the faucet is dry, we can make the assumption that there's at least some distribution of XRPs accross a few ten thousands of players. At that point, the experiment may start.
2. The price needs to be adjusted.
A fixed price will introduce some stability and some trust in the system. It will reinforce the idea that XRP is a way to prevent spammy transactions, not a hoarding money.
3. OpenCoin needs to make money.
OpenCoin will receive the money from people buying from the faucet, will keep 1% of the XRPs (minus those already given) and will have its online/consultancy services. If that's not enough then OpenCoin is obviously too greedy to be trusted for launching something that big.
4. Someone could buy a lot from us to control most of the economy.
Firstly, it has to be noted that this power is already in the hand of OpenCoin. So why cannot we trust someone else who would do exactly the same: throwing early money at high risk to gain significant control of a future economy?
Now, we have to think about what it means: the more one single player buy XRPs, the less the Ripple economy has a chance to become successful. Do you think that a bitcoin would worth 34$ if 10 players were keeping 1 million BTC each? I don't think so.
The situation is then exactly the same for any rich player than for OpenCoin: finding a balance between earning money and not crashing the structure by controlling too much.
5. OpenCoin has too keep some reserves, to reinject in the economy if needed.
No. It would means that OpenCoin becomes the government of the completely centralized Ripple economy. There's only two solutions: the Ripple economy sustains itself and is able to survive through problems and crisis or it is not. In that case, Ripple is not the solution we need.
Having OpenCoin as a Benevelent Dictator of the economy is the worst possible thing and is, by definition, the opposite of decentralization.
6. OpenCoin could buy from itself.
See question 4.
[1] Another solution is to propose a fixed price for most currencies (like dollars, euros, …). It doesn't matter if the price is not the same in different currencies: it's a selling price but not a buying price. During that bootstraping phase, the market price of XRPs will never go above that fixed price. Say that the fixed price of an XRP is 1€ and 1$ but that 1€=1.5$. It is more interesting to buy your XRP with dollar but it doesn't mean you will find someone to sell your XRP at 1€.
