Quote from: JoelKatz on December 11, 2013, 06:15:56 PM

Quote from: BldSwtTrs on December 11, 2013, 05:21:55 PM

What are the incentives for an exchange or a bank to become a gateway ?

The primary one is transfer fees. Every time an asset they issue changes hands inside the Ripple network, the gateway can charge a fee. Bitstamp, for example, charges 20 basis points ($2 per $1000). The net effect is that a gateway's outstanding obligations shrink without them having to do anything. This applies to any transaction made possible by the liquidity the gateway provides, such as cross-currency payments.

Gateways can also charge for any services they provide. This includes deposit fees, withdrawal fees, or even a monthly account maintenance fee if they want. In the future, when interest rates return to more normal levels, a fractional reserve gateway could draw revenue from interest on funds they hold.

https://ripple.com/ripple-gateways.pdf

fractional reserve gateways...that's scary....that you have said it lends credence that exchanges are fractional reserve as well....