If thats the case, why don't any of the exchanges do this ? Not one single cryptocurrency exchange anywhere in the world uses the blockchain for any of its trades.

Even Coinbase doesn't do it if it can avoid it. Watch this video - you'll see demonstrated how incredibly easy it is to do account-to-account transactions as opposed to blockchain-based ones. The presenter even demonstrates sending bitcoin to **email addresses ** when the receiver doesn't have a blockchain address.

http://www.youtube.com/watch?v=OOoffwOJbY8