I was interested in Bitcoin in graduate school. I don't remember the sequence of events that clearly, but one thing is clear: I didn't "follow my nose" and buy any Bitcoins back when they were about $1/coin, in 2010. As I dwelled on this sad fact, I also gradually recalled the reason I failed to invest some money in Bitcoins: basically, they were hard to buy.
When I say hard, what I mean is: you can't just charge some Bitcoins to your credit card, and then have them appear in your digital wallet. Instead, you either have to (1) get someone else to give you some Bitcoins (as the official site rather uselessly suggests), or (2) find a bank or financial services company that both takes U.S. wire transfers and has an exchange to allow you to purchase Bitcoins.
Oh, or you could mine them, which involves solving cryptography problems with your graphics card (specifically, finding very small SHA-256 hashes). But even in 2010, that ship had sailed -- if you weren't already mining Bitcoins, the difficulty had already ramped up so much that it just wasn't worth the effort.
So, in spite of my interest, I ended up...not buying Bitcoin. Recently, the exchange rate hit $1000/coin, and I'm clearly an imbecile for not following through on my interest and figuring out how to buy some damn Bitcoins.
This time, I'm determined to follow my nose. And my nose is leading me to an intriguing new online payments system, Ripple.
The technical details behind Ripple are complex, but the idea itself is simple: a distributed online exchange for all kinds of currencies -- both fiat (government-issued) money and the hundreds of digital currencies that have sprung up in the wake of the Bitcoin bubble. Ripple isn't the only online exchange for "real" money conversion into digital money, but it is distinguished by being both distributed and (essentially) free.
Here's what's particularly interesting about Ripple. Ripple is technically just a transaction protocol: it's a social network of "trust" interactions between users. Trust is meant quite literally: using the Ripple client, you specify exactly how much debt you trust each of your contacts for (if any). Trust, in Ripple parlance, is something much more serious than the typical "like" or "friend" links that exist in other social networks, because your trust connections serve as counterparties for transactions you participate in via Ripple. Transactions "ripple" through the network, hence the name.
However, setting up transactions betwen users of different (and possibly rare) currencies can be difficult because of illiquid markets, a problem that has historically plagued Bitcoin. Ripple has an interesting approach to this problem. It provides a protocol for moving around money in any currency, but it has its own internal currency, XRP, issued by Ripple Labs, the SF-based company that created Ripple. (The total amount of XRP is fixed, at 100 billion, which all already exists; XRP is quite different from crypto-currencies in that it is not mined.) The initial function of XRP is to serve as an intermediate for currency conversion, and transactions conducted in XRPs clear almost instantly. The intention of Ripple Labs is for XRP to become a sort of lingua franca of currency transfer. Think of them like bank wires, except they're instant and free.
Sound interesting? Here's a twist: right now, the XRP/dollar exchange rate roughly tracks the Bitcoin/dollar exchange rate. This makes sense, because digital currencies are experiencing a wild speculative bubble at the moment, and people just entering the system naturally tend to view the various competing currencies as being functionally equivalent. But, in reality, XRP is quite different, because the XRP supply is controlled by Ripple Labs. This dismays many Bitcoin diehards on philosophical grounds, because it means that there is some degree of central control over the system. However, from an investment perspective, it means that XRP has the possibility of behaving like an actual currency, because, like fiat currencies, the money supply can be rationally controlled. Bitcoins -- and the many imitators of Bitcoins -- are doomed to continue their wild exchange rate fluctuations, because they are in reality commodities, rather than currencies. And, there's a reason we conduct transactions in dollars rather than in barrels of oil!
Anyway, so, long story short: I bought some XRP, and I'm pretty happy with my decision, and the fact that I actually followed through this time. We'll see if it ends up being worth anything...
Want to get some XRP, and/or participate in the madness? The official Ripple site has a lot of information about getting started. It is possible to purchase XRP via "gateway" sites, such as JustCoin, SnapSwap and Peercover (which seems to have fixed its security issues). However, at the moment, the easiest way to get some XRP is actually to "get someone to give some to you" (as silly as that sounds) -- there are XRP giveaways regularly being held, which are announced through the Ripple Forum and XRP Talk Forum. (On both, my username is tinybike, and my Ripple address is rB3tXD38iFqcrdKTac8bhwBRNadUD2Z4zx -- come say hi!)