Q: What if OpenCoin sells all it's XRPs at once?
A: There is little incentive to do that, since the price would crash and OpenCoin would make less money. Even so, the result would be similar to recent Bitcoin crashes. Mass panic, and then the price recovering. But OpenCoin could only do this once. After that, the market will set the price. The core Ripple functionality of sending fiat-denominated IOUs securely to anywhere on the planet would be largely unaffected.
How about this outcome: we hoard billions upon billions of XRP. If you fork our implementation and remove the government mandated deanonymization, we will spend all our XRP and crash the price of that chain. It cost us nothing. If instead you remove our initial endowment from the chain, you will make everybody's wallets worthless because everybody has received coins that were initially ours. So there's no possibility for mutiny and you are our bitches.
You're assuming XRP has to be something more than a necessity to stop the network being flooded. Screw XRP. It's clearly a toy currency, but if you want to replace it as an anti-DOS device then come up with something better. Bitcoin's distribution via mining was ingenious, but there's no mining in Ripple (ie there's no voting with computing power).
In your example they'd crash the price of XRP, but as I say screw XRP, it's only there out of necessity.
Well, I certainly agree that Opencoin can only be trusted to care about Opencoin. However, the exchange doesn't have to involve XRP (apart from the transaction fee, i.e. one side doesn't have to be denominated in XRP). To be fair, you're saying you've seen it but you flat out asked where it was a second ago, which is the only reason it was brought up.
One the long term XRP is the least common denominator and people will hold it, injecting value, especially if it's stable or slowly appreciating. That's the whole business model, sell people XRP and make them seem like a good investment. They can buy USD IOUs only when they need to cash out.
That wasn't me asking.
Sorry, you're right that wasn't you at all. Just because that's OpenCoin's business model doesn't have to make it their reality. I do agree that XRP's are the most troublesome portion of Ripple, particularly when trying to sell it to the mindset of the typical bitcoiner, but I'm not sure it's a showstopper. This isn't bitcoin and it isn't a libertarian's wet dream, it's something in between.