Ripple ProjectSuppose you're in Canada and you want to send money to a friend in Sweden. You log in to your online banking service and enter your friend's Ripple ID (like an email address), and the amount you want to send. Your bank's Ripple server communicates with your friend's Ripple server and they coordinate to find a payment path between you. Your bank reports back the cost to you with transaction fees, if any, for your approval. The money ends up in one of your friend's accounts a few seconds later.
Behind the scenes, what you do not see, is that the path the Ripple system found to make the payment goes from your bank, through a Canadian export corporation to the bank in Sweden, to a smaller credit union with an account at that bank, to a member of the credit union named Anja, to a friend of hers, Bob, who participates in a community currency in Northern Sweden that your friend also uses.
When you approve the transaction, your friend's account at the community currency is credited with payment amount, in Swedish kronor, and Bob's account is deducted that amount. Bob had an outstanding debt with Anja, and that gets reduced in exchange for Anja's credit union account being credited. Then the credit union's Swedish bank account is credited, and the Canadian export firm's account is debited. That firm has given you a good exchange rate for your dollars into kronor as a way of converting kronor they hold back into dollars, and those dollars come out of your bank account and go into the firm's.
The end result is that value flowed from your bank account into your friend's community currency account via a hodge-podge of intermediaries, none of whom knew anything but who came next in the chain. Even the payer and recipient do not know who all the intermediaries were.