Why did Ripple Labs choose to create XRP rather than use Bitcoin to secure their transactions?
Some reasons I can think of (I do not work for or am affiliated with Ripple Labs by the way, so these are just what I think their reasons are):
BTC are very slow (orders of magnitude slower) to confirm compared to Ripple's ledgers.
Ripple has a very low transaction rate at the moment and very few gateways and validators compared to Bitcoin. It's too soon to tell which would be faster on equal footing. Normal purchases are reasonably assured with zero confirmations.
Jed said from the beginning he doesn't like the idea of burning electricity to secure the network.
Electrophobia?
Ripple validators would need to track the ledger _and_ the Bitcoin block chain.
That depends on what you are using Bitcoin for. Coordinating an attack on the ledger and on Stratum would be very difficult, so you wouldn't need a blockchain to scrub.
Bitcoin scales poorly, if transactions on Ripple were done on Bitcoin, transaction volume would go through the roof (reminds me that I have to collect stats about transaction volume), already now Ripple likely has a higher transaction volume than Bitcoin, which is currently hard capped at less than 10 TX/s (imagine being able to only do 10 trades globally per second!)
That's not stopping Colored Coin, Mastercoin, and Counterparty from developing layers over Bitcoin. Bitcoin is growing organically. A baby cheetah does not run 60 mph. Bitcoin is capable of outprocessing every other centralized payment system when the block size limit is increased.
Bitcoin doesn't need to replace every face to face transaction, but even if it did, compared to other payment systems, it is cheap. Typical transaction fees tend to be 0.1 to 0.3 mBTC. It's possible for such an exception as 0.8 mBTC, but wallet management with coin control will mitigate these costs when smarter wallets are created.
Marketing reasons probably too, also even though it is improving, BTC don't have the best rep out there.
They said the same thing about the internet in the mid '90s. There is no such thing as bad publicity.
It would be kinda hard to get banks to buy BTC first to transact something on Ripple, a fact that Mastercoin, Counterparty et.al. are going to find out soon enough.
Credit unions take care of their community and care about their members. They will adapt to what best servos their membership. But I presume you mean central banks and investment banks. Their services will no longer be required. Crowd funding is the future. There are plenty of jobs for bank employees in the food service industry.
Of course also the possibility to make/earn money from the system while being able to go fully open source with it asap (they do not earn money by providing the infrastructure or software, they earn money by people using their product and they hope for the network effect to kick in so there is no fork emerging that is more popular than their network)
Motivating development is a double edge sword. Financial incentives create observational bias due to the strong emotional nature of those invested. That's why I advocate a focus on Bitcoin in order to share resources and gain from the greater adoption rather than early adoption speculation. Bitcoin has been growing exponentially and with each year it gains more momentum.
They messed up a few things too by the way, calling XRP "ripples" is what bugs me most. Instead of calling the smallest unit (1 µXRP) "drop", they should have jsut called the whole currency "droplets", "waves" or something else. Especially their first target market (this forum) did simply treat it as another altcoin and by having the same name, it messed up a lot imho. (It's like a large bitcoin exchange calling itself "Bitcoin" - just see the confusion with The Block Chain and blockchain.info already)
Naming conventions tend to be organic. In my opinion, the most significant quantity of bitcoins is the minimal dust unit of 5300 Satoshis (plus transaction fee) which should be the base unit for now. They will probably be the base units of Colored Coins.
