3. It must transact trades almost instantaneously. When you are watching a graph of trades in your region and want to trade at a very specific time, you must be able to do so. (This is extremely important for arbitragers and other traders who help keep the price fluctuation down.)
There are two parts to a trade - matching and locking the orders, and transferring value. "When you are watching a graph of trades in your region and want to trade at a very specific time, you must be able to do so." Really I think this means "When you are watching a graph of trades and you would like to make a trade at that current price, you must be able to do so, or have the same ability to do so as every other member of the exchange". Trades with fiat can't be instantaneous, but locking in a price can be.
You're shooting too low, it certainly is possible.
We must duplicate the instantaneous nature of fiat->crypto trading that mtgox currently offers.
In fact we must be even faster. The market demands it.
What this requires, of course, is that criteria 6 be an actual transference of value.
Or you use SSL logs to proof (almost) instantaneous transaction of fiat as described in
https://bitcointalk.org/index.php?topic=173220.0.
I think a perfect p2p-exchange should allow instantaneous AND non-instantaneous trade fulfilling because it is always a trade-off. The users should be able to choose what they prefer. If you place an order you should be able to specify to what terms you are willing to agree:
1) in case of dispute, the seller has to proof using SSL-logs that he didn't receive the fiat.
2) in case of dispute, the buyer has to proof using SSL-logs that he did send the fiat.
3) in case of dispute, both parties have to proof using SSL-logs that they send or didn't receive the money.
4) the bitcoin-buyer has to provide instant proof of payment using SSL-logs.
5) in case of dispute, nothing happens. Just use supplied user ratings similar to bitcoin-otc.
6) use 2-party shared bitcoin collateral and both loose if trade is not fulfilled.
Options 1-4 would involve an escrow and the recording of SSL logs of your banking session and sending it to the escrow.
Option 4 would even allow
instantaneous trades between bitcoin and fiat without IOUs.
Option 5 would be based on user supplied ratings similar to bitcoin-otc
Option 6 would be possible without escrow.
I think there are many good reasons why some users might prefer one of these methods over another. Why not let each user decide which way to trade (speed vs. risk vs. price etc.). In this way, the exchange market will automatically determine different prices for different trust levels and order types.
So I would actually change #3 to:
3a. It must match trades almost instantaneously.When you are watching a graph of trades in your region and want to trade at a very specific time, you must be able to do so.
3b. It must be possible to fulfill matched trades almost instantaneously if the chosen fiat transfer mechanism allows it.
*EDIT* Btw, the options which I specified above obviously focus on direct trading of fiat vs bitcoin. Of course it would be nice to have in addition to this some IOU based trading or something like a peged crypto-fiat like bitshares.