At a fundamental level, this is all about derivatives.
Yes. I want derivatives which are an order of magnitude easier to use. So much easier that they are invisible and seemless to the average user.
Nominally holding commodity A, while it is stored as commodity B, means you hold B and you also hold a derivative that is short B and long A. And your unit of B that you are holding should be in escrow in case the derivative goes sour.
If the derivative short B and long A is inextricably tied to a unit of commodity B, then it is safe from default, but there is not much advantage compared to just trading commodity A. If they are severed, then there is risk of default, and the risk is tied to whoever is the counterparty to the derivative, which means they are not fungible.
I think I agree with those statements, if I understand them correctly, except that I think there is a HUGE advantage to holding oil-denominated bitcoins, whereas you say there is not much advantage.
Try creating a trading account to buy some oil futures. Go ahead, I'll wait . . . .
I bet your experience will be several orders of magnitude more complicated than clicking "value stored as" and choosing "oil" in your bitcoin client.
It is premature to speak of how a block chain or somesuch could implement deriatives trading, before the inherent issues are resolved conceptually.
Well, resolving the conceptual issues is what this thread is for. I want to know if this idea has a fatal flaw.