Bitcoin is decentralized. Ripple fully depends on OpenCoin, Inc. If you are investing you are investing in two entirly different things and two entireley different concepts. The key here is the coins can't be mined in some agreed upon fashion, they must be issued by OpenCoin, Inc. Ripple is closer to investing in a stock rather than a decentrailized currency. There is no decentralized concensus with Ripple because there is no way to achieve that concensus.
Bitcoin is an experiment in a decentralized consensus. It is funny to see people say its flaw is that there is no overlord or central authority. When you analyze these currency systems the thing to look for is a decentralized consensus mechanism such as mining. If that does not exist then you have a centralized system. If it is "backed" by something then you also have a centralized system because some entity controls the assets. These types of things are not like Bitcoin, litecoin, etc. Not that everything centralized is bad, it is just not the same thing.
@Anon, the Ripple protocol is designed to be decentralized, just like bitcoin. What you're referring to is the currency distribution. The reason the coins are premined is because Ripple works via consensus, rather than requiring mining. There is no mining, therefore coins can't be mined.
One of the main advantages to consensus is speed. Transactions can be confirmed in just a few seconds.
The truth is Bitcoin is decentralized and Ripple is not. The risks associated with each are completly different. You want to divert attanetion away from this fact with a bunch of buzzwords. they are both experimental and risky for different reasons.
@anon I gather you're one of the bitcoiners who view Ripple with suspicion. I've seen a lot of posts to that effect as I used to write for CoinDesk. In truth ripples are only going to be worth what people are willing to pay for them. There is no intrinsic value to any of these currencies. Bitcoin started out with a value of just pennies and took about a year just to reach the dollar mark. Then it climbed, fell, climbed, fell, etc. Just as for stocks, or some may even say tulips, the values are all about perception. The volatility is actually bad for bitcoin's adoption as a currency for mass adoption. That's one of the issues I addressed in the CFO piece based on interviews with bitcoin enthusiasts who found that people just weren't ready to take their pay in digital currency because it was too much like gambling.
"Math-based" currency is just some general term that menas you use math. Decentralized means no enity is in control and that there is a consensus achieved in a decentralized manner. Ripple is a centralized system issues by OpenCoin, Inc. People use buzzwords like "math-based" currencies to confuse people over the difference between a centralized currency like Ripple, Amazon Coin, Fluz, etc. and decentralized currencies like Bitcoin, Litecoin, etc. Decentralized currencies depend on "mining" to achieve the consensus while centrilized systems depend on some singular entity. If you don't understand the difference then DON'T INVEST.
"Backed" usually means you have some something left over if the value of the currency goes to zero. Currencies like Bitcoin, Ripple, and US Dollar are not backed if that is the dedinition you use. Some people say US Dollar is backed by the US Government, Bitcoin is backed by the faith of their users. If that is the definition you use then Ripple is backed by OpenCoin, Inc. since they issue Ripple and the value of Riupple depends on OpenCoin, Inc. operatinging their trading platform.
@anon I'm not quite sure what you're getting at in declaring both to be decentralized. Both ripple and bitcoin are considered to be math-based currencies -- not "backed" -- and the same holds true for a number of currencies that attempted to copy bitcoin. Open Coin was the original name of the company that launched Ripple, though the name was changed to Ripple Labs at the end of September 2013 just over 3 weeks after after I published an article on digital currency on CFO.com
Bitcoin is decentralized, Ripple is decentralized and issued by OpenCoin, Inc. OpenCoin, inc. is funded by the sales/appreciation of Ripple. Some people have tried to cloud the waters and have tried to compare centralized systems or "backed" currencies with decentralized systems like Bitcoin. Apples and oranges.
Bitcoin and Ripple are completely different things. Bitcoin is a decentralized currency, payment system and commodity. Ripple is a centralized system created by a company and they issue the currency. If Ripple were to charge a transaction fee they would be regulated as a money transmitter. Instead, they created Ripples which must be "destroyed" in order to facilitate a transaction on their platform.
Bitcoin has 8 decimal places so there is no issue with microtransactions as far as dividing a Bitcoin up into smaller denominations.
Max, yes, in fact they would require far less decimel division. As bitcoin is about $500 per coin, give or take, purchases usually have to made in fractions of the coin represented by decimels. But ripples, at least for now, have a much smaller valuation.
Micro-transactions are one of the big advantages for digital currency because the current payment noncash options typically add on fees that are a disincetive for any transactions below a certain amount. Even physical retail establishments sometimes ask for a $10 minimum for credit card payments.