I don't get how people don't understand this after 1-2 hours of reading and still claim that Ripple is so complex,
Especially if those people do understand the complexities of Bitcoin...
Yeah, just like with Bitcoin, there are certainly different levels of understanding (I rarely try to go beyond "it's both digital money, depending on your perception of what money actually is you'll see it as currency or asset" with BTC for example), the basic "Ripple = distributed exchange and marketplace" part shouldn't be THAT hard to get though.
Most Bitcoiners seem to have a hard time ignoring XRP as native asset, maybe since all they are used to so far are systems that only exist for this single asset and you need to jump through hoops to actually trade it?
What happens if I "receive" a Casascius coin in RL and I want to exchange it for the real asset but the person who made it already took the money from it - or worse: runs a hidden node that will double-spend with a high fee any coin that I try tro move off a Casascious coin so I have no way other than trust to spend the BTC?
Then you have the benefit of recourse against Casascius who has made public representations guaranteeing he has not kept the keys which you relied upon before accepting a Casascius Coin, and any sweep like that would be evidence to the contrary which would be a tortious and likely criminal fraud that caused you a loss. There is also a big difference - for me to commit a theft like this (assuming I still had keys and actually could), this would require affirmative steps taken to commit the theft, unlike a Ripple counterparty who merely needs to do nothing to default on someone. Since I've made clear my real life identity and plenty of people have confirmed it, and have publicly stated my intentions to remain subject to the law, I think it's not apt as a comparison.
I can think of several ways how you could commit theft even more passively (e.g. issuing several coins with the same private key or also just getting "hacked", being "sorry" and move on like TradeFortress)
Still in the end one has to trust you (that you keep your promises) as well as the legal system (if you don't keep your promises) to use your coins. This is not different to Ripple, where the only difference is that you simply declare and encode that trust in a special type of transaction instead of just implying it by using your service(s).
Ripple, on the other hand, can fail spectacularly with as few as three people. Alice "owes" Bob and Bob "sells" that debt to Charlie, as Charlie trusts Alice. Despite that trust, Alice doesn't feel like paying Charlie, or claims that she never actually owed "Bob", but rather, a hacker made the original transfer and so it never truly existed in the first place. Charlie is pretty much SOL and can't sue to recover from Alice because legally Alice doesn't owe Charlie anything. His sole remedy is to let Bob know what a jerk of a friend he has. This is no big deal if we're talking lunch money, but when it's $10k or $50k, we're talking bigger amounts than most people's social capital really makes sense to leverage.
So you mean the following network (A,B,C are Alice, Bob and Charlie) for example (using 100 USD amounts):
B trusts A for 1000 USD and has currently 100 USD deposited with A.
C trusts A for 1000 USD and has currently 0 USD deposited with A.
B sends 100 USD.A to C and gets something in return for that outside of Ripple (e.g. a nice massage).
A now claims that the 100 USD B has deposited were used up because she felt like shopping, the 100 USD were charged back by PayPal, or that only B would be allowed to redeem anyways.
What A did is most likely illegal under EU directive 2009/110/EC (
http://ec.europa.eu/internal_market/payments/emoney/) and probably also in most other jurisdictions worldwide too. C has every legal right to sue her and these laws governing this are in place far longer than e.g. Bitcoin existing, not very abstract, complex or exotic at all and he would have a very easy time finding an eager lawer to represent this easy case.
Also C did something not very smart by not checking beforehand with A that he is actually allowed to withdraw (e.g. C is based in Cuba, A in the US...), so there might be situations where A legitimately can not send the actual assets to someone who wants to redeem them (e.g. one of your customers enters a invalid payment address).
Meanwhile, Ripple aside, if Alice "owes" Bob and they have a written agreement, and Bob "assigns" that debt to Charlie with a written assignment agreement... the whole thing is magically enforceable in a court of law (happens every day with debt collectors). Amazingly, a mere piece of paper (or equivalent signed electronic communication) has just trumped all of Ripple in terms of usefulness, and even works with larger amounts like $50k. (Now for lunch money, Ripple's probably got it beat for convenience...but then again...so has cash, paypal, or your favorite bank payment app)
Ripple in its current form is not really any more this "community credit" system that you describe, A most likely is a registered MSP in B's and C's jurisdiction, publishes regular audits and deals with amouts far beyond 50k USD (Bitstamp alone has a few millions of USD issued on Ripple right now, not even counting BTC or other currencies). Ripple transactions are digitally signed, cannot be faked without having the private key and so on. This is even easier to proof than e.g. a Bitcoin payment to a merchant service like BitPay where you first need to provide proof that the address you sent to was actually from them (and not e.g. displayed by a trojan on your system), the only chance for that being to contact them and ask for a custom text signed witht he private key of that address or doing blockchain analysis.