[nybble41]

>> 1) No counterparty risk. Everyone can get hacked, but coinbase being hacked shouldn't every, under any circumstances result in me loosing any bitcoin they hold on my behalf. > This point may prove to be very sticky. It might be solvable with smart contracts...

Shouldn't be that hard, even using just the features available in Bitcoin today. You'd need a 2-of-2 multisignature wallet for each account holder, with one key held by Coinbase and the other by the user. When the user wants to spend some coins, he or she signs a transaction which Coinbase prepares and counter-signs; neither the user nor Coinbase—or an attacker with access to Coinbase's keys—can transfer the funds unilaterally.

The only thing missing is a convenient UI.

[warbiscuit]

That's pretty much exactly how the EtherDelta smart contract works. The contract can only move coins you've signed an order for, and only when it's properly paired with a matching counter-order.

I think the mainly catch would be scaling the speed (etherdelta is limited to the ETH network block rate). I don't know too much about lightning's details, but given that they've demonstrated atomic cross-chain swaps, I bet it's set up to handle something exactly like what's needed.

Which is quite exciting... I just always moderate my enthusiasm because for all complex software projects, the devil (and 80% of the work) is in the details :)