0 points by pseudoscops 9 minutes ago | link | edit | delete
This sort of bad PR for Bitcoin and crypto in general could all be avoided if decentralized exchanges became a bit more fashionable.
I posted a link to http://bitshares.org earlier but now realise that there isn't that much information immediately obvious there on how the decentralised BitShares exchange works.
This episode from BitShares.tv provides a bit more information than the homepage on the main website:
I think bitshares has a lot to offer, but at the end of the day, someone still needs to maintain a brick-and-mortar bank account for people to send their fiat deposits to. As long as people still need to exchange fiat, there is no way of avoiding counterparty risk for an exchange (even if the "exchange" is an arbitrary peer)
This is true to a large degree at present, but could change with greater adoption.
It's worth remembering that one of the main reasons that people send Bitcoins to a centralised exchange such as Bitstamp is so that they can sell some them for dollars and lock in profit. It's how you cash out of Bitcoin and in to fiat, thus avoiding the inherent volatility of the Bitcoin price for a portion of your portfolio.
With a decentralised exchange such as BitShares you can 'cash-out' within the exchanges using pegged BitAssets such as BitUSD or BitGold. Everything remains as crypto. This means you only ever really need to touch a centralised exchange or gateway and convert to real fiat dollars when you need to actually spend on something in the real world. This too will change over time as more vendors accepts crypto currencies directly such as bitBTC and bitUSD. BitUSD, and other BitAssets held in the BitShares decentralized exchange pay a yield too (i.e. interest).
The BitShares business development team have been busy courting financial institutions that'll be able to act as gateways for $'s and other fiat currencies for when you do need to spend. I think there has been talk of being able to directly charge up credit cards with BitUSD from your BitShares account.
They're not a con job, they're developing genuinely interesting technology, though I think they're at great risk of being leapfrogged by other systems in the near future.
