I work in the IT of the finance industry for 7 years now...and what you seem to miss is that the problem is not purely a technical one. I am very certain that it is the more easy part of the task to develop a technically strong solution (scalable infrastructure, trading backend disconnected from web frontend, api for developing trading software and whatnot). I believe the hard parts are:

1. Security - You need a whole lot of infrastructure for that. Not only to secure your IT systems but also the processes around it. I mean, cold storage for bitcoins is the one thing, securing that cold storage is the other thing (good old fashioned bank robbery, anyone?). You also need to secure the company from it's employees. There is no such thing as 100% trust as long as there are millions of fiat currency involved.

2. Regulation - Everyone wants to escape regulation. But you should not. It is there for a reason. Regulation is one of the main reasons why you can actually trust a company to offer their service in a certain standard. Regulation forces you to keep your IT systems safe and to have disaster recovery plans and and and...But keep in mind that trust is never 100%.

3. Decentralization - I believe you can't. It's a wet dream, I get the notion of it. But a decentralized exchange would mean decentralized trades. And how do you fashion that? How are you going to send your dollars to someone else? By mail?

An exchange will always be a centralized, bank-like institution. And if you want to do that you should do it the 'old-fashioned' way. You should do it in a jurisidication which forces you to provide the service to a certain standard and thus will allow your customers to put some trust (not 100%!) into your company.

In terms of profit: We are talking about something which will need a lot of full-time employees. And which will need a lot of funding. How are you going to get that funding if you don't offer profit in return? shareholder-owned != community-owned.

The closest you can get to a decentralized exchange is developing a technical exchange solution and giving it away as free software. Then you can hope for many people around the world to open their own exchange. And still then, their earnings must cover their cost in the long run. Costs will be determined by regulation and thus by location. And you will probably end up with the cheaper exchanges in far-far-away-land being the most frequented and thus the market will not be much more secured than it is now.

That's just my 2 cents.
3J

ThreeJay

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