While yes I could hope that the whole world just uses bitcoin, I could also send Euro's to my friend in Europe while holding USD myself just by sending it in bitcoin no? I put BTC in at one exchange and they take euro out at another exchange.
Then you have currency risk while the money is in bitcoins. You could also get a gold bar, FedEx it to "Europe" and your friend from there sells it locally. Even if you imagine you have a teleporting device that takes only 1 hour to transfer the gold bar, this still is not very handy if you just want Euros.
With Ripple transactions are atomic (and irreversible after ~10 seconds), so your friend knows exactly how many Euros will arrive. Just imagine you paying at Amazon - they will not be happy with receiving "roughly" 50 USD! Likely they won't even be happy if you overpay, because then they need to pay you back.
By the way, the thing you describe carries the same counterparty risk and "money is debt/IOUs are evil" mentality that so many seem to criticise about Ripple. You didn't bring up that point, so i just write it for the others.
While I hope that there will be other/better infrastructure to send and automatically convert funds to native currencies from bitcoins, I'd say Ripple is definitely one of them.
The reason might simply be that they have ~25 people working paid and full time on both development of software and business relations, so they are more likely to come across and talk to regulators than members of the Bitcoin foundation.[\quote]
Also the regulations to being a gateway are likely easier to fulfill than being a money exchanger (something that a bitcoin exchange likely would be licensed as) - and you can leave the trading and exchanging to your customers.
That's the part I'm particularly skeptical about. There are lots of companies on the edge of new and exotic frontiers of the law yet they don't get airtime infront of the senate. Bitcoin has a $5 billion market cap with hundreds of thousands if not more users worldwide, but ripple? They seem just like a startup, albeit with some more favorable treatment. As for the regulatiosn of being a gateway being likely easier to fulfill, I think thats their agenda- to promote this idea. That Ripple is somehow more "legal".
Serious question, no boasting or cynism intended:
Which Bitcoin focussed companies have more than 20 full time employees (and not just customer support but in business and software development)?
Ripple Labs still IS fairly bitcoin focussed (which even might be a limiting factor for them actually - maybe they would have been better off approaching banks first before approaching this community?). Most of the work, money and time in Bitcoin seems to be spent on actually getting rid of them again on exchanges, either directly or indirectly through merchant solutions that pay out USD and that offer a consolidated (sell) order book towards users.
Whom would you rather have seen in front of the senate (well it would have been already cool to have Chris there instead of this failure of a lawyer lady)?
I agree that they might push for the idea that it is less hassle to become a gateway than to become a fully licensed independent exchange, it is their business model and value proposition after all. Again I don't think that this threatens Bitcoin as such, more exchanges who want to be able to operate their own order book with all positive and negative parts of it (look at the spread between MtGox and Bitstamp for weeks now for example). I personally don't care if I sell my Bitcoins on Ripple and get my Euros from a gateway or if I sell them on an exchange and get the Euros from them (well, the exchange might have worse rates due to lower competition) and vice versa, as long as it is easier for me to move between fiat and BTC.
Edit: Gotta listen very hard to my pillow for a few hours with closed eyes - I'll be back later and thanks for keeping the discussion civilized so far!
