This is why we need a decentralized exchange, owned by nobody. The Mastercoin Foundation is creating the first. And I am quite certain there are more in the pipeline.
Centralized exchanges will be a remnant of the beginning stages of Bitcoin.
I haven't read up much on the concept of decentralized exchanges yet. I'm curious, how would a decentralized exchange handle the process of moving the fiat cash among the users fast enough to act as an exchange?
decentralized exchanges don't operate with the actual underlying asset, rather debt denominated instruments. so you would buy "8 BobOwesMeOneDollar tokens" and then take them down to bob who lives down the street and trade them to bob for 8 dollars.
I'm not sure I see the difference between Mark Karapeles refusing to give me my $8 and Bob from the "decentralized exchange" refusing to give me my $8.
It sounds a bit like localbitcoins.com, which works well if you have someone nearby that is participating, but is completely useless if you live in a region that doesn't have a lot of participation in the "decentralized solution".
sure well there are some similarities ill grant but there are also a lot of differences. it would be a lot like localbitcoins except with price discovery. also it has decentralization which grants it resilience, if bob goes out of business than he isnt going to drag the market down like gox has. maybe he'll bring it down by a dollar or two, not hundreds. it becomes failure tolerant.
on the surface it looks a lot like localbitcoins but by operating as an open source protocol it allows for new layers to be built ontop in a way that we cant do with a centralized system like localbitcoins. its analogous to saying that "i cant really see the difference between bitcoin and credit cards, i can pay for my lunch with either one". one example would be, individual actors could federate, they could agree to accept each others instruments, then we have the best of both worlds, deep and liquid markets with the fault tolerance that comes from the decentralization of different issuers.