Until now, one of main flaws of bitcoin is that still relies on centralized exchanges. For starters, it’s a philosophical dilemma for currency that is inherently decentralized, leaving bitcoin vulnerable to government intervention.
Moreover, while the concept of the currency continues to stand the test of time, the exchanges have been less resilient. The New York-based Bitfloor was robbed of $250,000 worth of bitcoins in September, Bitcoinica has been hacked multiple times, and MtGox, the largest exchange around, was breached in 2011 causing bitcoin prices to plummet.
These confidence-sapping breaches have hampered bitcoin's spread and made ordinary people wary, leaving the crytpocurrency banished to the nether-regions of the ‘net where it’s used mainly for drugs, sex, and generally dark arts, like child porn and Craigslist hitmen.
A concept called Ripple could change all of that, by essentially turning us all into our own banks, Facebook-style. First utilized by Ryan Fugger, a developer from Vancouver, Ripple allows users to extend credit to strangers through their social network. Or, in other words, you could extend credit to the friend of a friend, with the middle person acting as the guarantor.