<p>That wouldn't really be a bad thing if they were reliable and kept costs down. But I think it's inevitable that, if Ripple catches on, small gateways will always be around at least to serve more remote and underbanked areas and populations that transnationals can't be bothered to target.</p>

<p>However, I don't think the barrier to entry will be that high. You might think that a small company couldn't compete with a larger company because trust is required. But actually, a gateway can operate without people trusting it. The gateway can basically resell another gateway's IOUs for cash. And for getting cash out, the gateway can accept other gateway's IOUs. I think there will always be "gateways" of this type selling and buying IOUs in person.</p>

<p>Over time, if the gateway continues to operate reliably, people will hold its IOUs. This is especially likely if the gateway offers some advantages such as a lower transfer fee or the ability to costlessly exchange their IOUs for IOUs from a number of other gateways.</p>

<p>Of course, transnationals may be able to eliminate this opportunity by providing their own costless inter-gateway exchanges and keeping their own transfer fees low. But if they serve everyone at low cost, nobody should much care that there isn't much competition.</p>

<p>A model that I frequently use to think about the relationship between gateways is Internet service providers. They compete with each other, but if they don't also inter-operate with each other, none of their customers will be happy and they will move to other providers that inter-operate with their competitors better. Small Internet service providers don't exactly compete on a level playing field, let's be honest, but they still have little problem finding niche markets.</p>

CC BY-SA 3.0
2013-02-21T10:56:51.807Z
2013-02-21T10:56:51.807Z
David Schwartz
<p>Bigger and better reputations might beget more business and so on. What can possibly prevent emergence of a small oligopoly of transnational Ripple gateways ?  </p>

<ripple><ripple-gateways>
Is there any chance of the Ripple gateway market NOT consolidating into a small transnational oligopoly?
Alex Kravets
# Is there any chance of the Ripple gateway market NOT consolidating into a small transnational oligopoly?

(Asked by: username_0 on 2013-02-16)

Bigger and better reputations might beget more business and so on. What can possibly prevent emergence of a small oligopoly of transnational Ripple gateways ?

**Tags:** ripple, ripple-gateways


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## 1 answers

### Answer by username_1 on 2013-02-21. Score: 6 | Accepted answer

That wouldn't really be a bad thing if they were reliable and kept costs down. But I think it's inevitable that, if Ripple catches on, small gateways will always be around at least to serve more remote and underbanked areas and populations that transnationals can't be bothered to target.

However, I don't think the barrier to entry will be that high. You might think that a small company couldn't compete with a larger company because trust is required. But actually, a gateway can operate without people trusting it. The gateway can basically resell another gateway's IOUs for cash. And for getting cash out, the gateway can accept other gateway's IOUs. I think there will always be "gateways" of this type selling and buying IOUs in person.

Over time, if the gateway continues to operate reliably, people will hold its IOUs. This is especially likely if the gateway offers some advantages such as a lower transfer fee or the ability to costlessly exchange their IOUs for IOUs from a number of other gateways.

Of course, transnationals may be able to eliminate this opportunity by providing their own costless inter-gateway exchanges and keeping their own transfer fees low. But if they serve everyone at low cost, nobody should much care that there isn't much competition.

A model that I frequently use to think about the relationship between gateways is Internet service providers. They compete with each other, but if they don't also inter-operate with each other, none of their customers will be happy and they will move to other providers that inter-operate with their competitors better. Small Internet service providers don't exactly compete on a level playing field, let's be honest, but they still have little problem finding niche markets.


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