The IOUs are transferable, if not entirely fungible. The idea is that the per-transaction haggling is handled by the server (automated route-finding), some fungibility is achieved automatically (circular debts are canceled automatically), and people will act to balance income vs expense by settling large outstanding debts for cash (incentice provided by credit limits).
The single server problem is a huge liability, but distributed route finding and cryptographic chains to provide distributed record keeping seem to me a remarkably easy problem.
I don't know much about RipplePay, are the IOUs denominated in some standard unit?
Less Wrong used to like Bitcoin before it was cool. Monthly threads popped up around the same time a pricing bubble brought mainstream attention last year. When the bubble popped, and price continued to deflate, discussion on this site stopped entirely. Was there a change of sign in the social status of the topic, is the topic fully explored, or has there simply happened nothing of interest over the last year?
If you are not familiar with Bitcoin, here is one intro I happen to like.
Kaj Sotala lists a number of previous threads on the topic:
Less Wrong seems like a good place to discuss recent developments, if one does not want to suffer the inanity of the officially unofficial forum. If you are not longer interested in Bitcoin, perhaps send your remaining balance to the Singularity Institute?