This is exactly the same as the banks do: Creating and destroying fiat money. Should this catch on, we, the people can take the banking business out of the banks hands and the wealth the banks skim from us remains in our hands.
Wait a minute.... I thought we were meant to be avoiding repeating the mistakes of the bank?
From what I understand, it requires you put trust in people. For me, the strength of Bitcoin is that you don't have to trust people, if they send you the coins, you have the coins. In this system, what's stopping someone saying "okay, I trust Anu for $20" and then anu just not coughing up that $20 when required?
The whole benefit of an exchange, for me, is that I don't need to know anyone (other than the exchange) I can just send my money, buy some coins.
Also, based on reading user experiences, it seems this is even more reliant on critical mass for success, yet it's incredibly hard to get started with nobody else there. That seems a bit paradoxical. Have you any way to incentivise people using this? Also, if you're only streamlining relationships with friends, then why do we need this system in the first place? e.g. it requires me to say "I trust anu" but if I already trust anu, why do I need zeroreserve? Or is the main focus on trust chains formed including people you don't know (which would be hard to do manually arrange)
If the focus is on trust chains, wont things like adding bots as friends, or adding the pirate party as a trusted party be bad? I would have thought trust links formed where there is actually no real world 2 way trust, other than some guy in IRC saying "add this bot", undermine the strength and security of the entire system? And with trust chains, doesn't that mean that the whole networks trust or reliability is dependent on how trustworthy and reliable every single person in the network is (e.g. if everyone adds that bot, and the operator of that bot defaults on the amount people have naively trust it with, any transactions that do or have gone through that node - which would be a lot if everyone randomly adds it to get started - will be defrauded?)
I think the idea of a distributed exchange is good, but to me, this particular system has too much of an (unreliable) human element for trust. Although I may have misinterpreted all this.