TradeFortress's Ripple scam is the "I'll give XYZ if you give me your private key" of the Ripple world. He's shamelessly duping people who don't understand Ripple. That's not a flaw in the underlying protocol, but it is a "social flaw" surrounding Ripple.
I seriously don't understand why people are paying so much for XRP, though. It's a system with a lot of promise and some flaws (including social flaws), but the market cap for XRP is *insane*. It's a totally unproven system. We don't even know if its fundamental innovation (the consensus system) really works in the real world.
And think about this: OpenCoin will hold to 50% of the total Ripples created. You need to grant them a LOT of trust to place money in XRPs. They can crash the market with a fart, and they may be very well decide to hold onto 80% on the XRPs. Or to 90%. They won't tell you, because they don't know, they will just do what it suits best to them.
Now compare that shit with BTC, my friend.
You only need to trust them if you hold XRP. Who cares if the XRP market crashes when you're using Ripple as a distributed cryptocurrency exchange?
What are you talking about? You do not exchange cryptocurrency in Ripple. You exchange a) XRP's or b) other cryptocurrencies IOU's
The only thing you exchange on Mt Gox is IOUs for USD and BTC. You have to trust that Mt Gox will let you withdraw your balance at the end of day. (The law might help you if Mt Gox defaults, but a gateway can attach legal meaning to its Ripple IOUs as well.) Ripple isn't replacing Bitcoin, and you shouldn't treat gateway IOUs as any more secure than fiat or bitcoin on an exchange. However, Ripple does potentially provide a very interesting replacement for the exchange component of the Bitcoin world.
As for whether XRP will compete with Bitcoin: I agree with the skeptics in this thread that the degree of control OpenCoin has is a good reason to shy away from using XRP as a currency and a store of value. Until such a point where OpenCoin's control has become negligible, XRP won't be as "free" a currency as bitcoin, and I think this is a compelling reason to not use it. This isn't really a criticism of Ripple, because using XRP as a currency isn't the point of Ripple. I have about 200 XRP total, and I'm going to sell all the ones I get in the giveaway immediately. Using or speculating in XRP is fine if you want to do it, but I don't. This doesn't make me less excited about Ripple.
Agreed, moonshot bids for $20 coins don't really count. I keep meaning to create an index that divides each bid/ask by the % distance from the current MMR. I think it would be much more insightful. I just can't square the maths to adjust for the fact that bids only differ by 100% but asks can be many 1000% higher. Anyone know how to properly adjust for that?
Simple, just base it on the logarithm of the price.