[ne0n]

So what happens when somebody doesn't secure the private keys to their Overstock shares well enough? A hacker steals your Overstock shares, and now they own them? What happens if someone steals the shares from the CEO? Obviously the hacker could never make use of those shares or else they would get caught. In a system like this, it can't be truly decentralized, can it?

[deweller]

From a technical perspective, it can. See http://counterparty.io/ for a decentralized exchange in action.

Do you mean you don't think people can be trusted to keep their own shares safe? Securing a large value of cryptocurrency is challenging right now. But if you don't trust yourself to do it, you can hire a third party that you do trust to hold your shares for you.

[ne0n]

"Do you mean you don't think people can be trusted to keep their own shares safe?" Well, to a degree, yeah. Most people don't know how to properly keep them safe.

The main thing I'm trying to say is that it's potentially easier to steal shares, and there is really no way of reversing it if it's decentralized. If you know some shares are stolen, can you invalidate them, or reissue shares? It's not really completely decentralized if you can. There is probably still a central authority for creating and issuing shares, but they will allow you to trade the shares in a peer-to-peer way.

[ThomPete]

Just thinking loosly here.

It my understanding that the decentralized part refers to the networked validation.

I.e couldn't you imagine a setup where the network collectively invalidates a set of shares and re-issue them back to the original owner. A kind of distributed jury system.

Now the problem of course is that the jury could be wrong and I have no idea about the actual implementation but it seems to me like a potential solution in the future.

[Kalium]

Even if that's the case, how do you convince the network that the shares need to be invalidated? How do you do that in a way that can't be faked?

That sounds a lot like another set of private keys to me. We already know those are vulnerable to being stolen.

[ThomPete]

Because the protocol is transparent so you can trace what happened?

Ebay and Paypal solve 60million disputes a year using software.

http://techcircle.vccircle.com/2011/02/08/ebay-paypal-solve-...

I am not saying I know how to do this just saying that I don't think it's going to be as hard as some might thing. But sure I could be wrong.

And keep in mind. No system is perfect. Neither is the crypto-protocol. But it doesn't need to be. It just have to be good enough.

[Kalium]

Just because you can trace how shares/money moved doesn't mean you can convince the rest of the network that the movement was improper.

This doesn't meet any sane definition of "good enough". It gives up a bunch of protections for no real gains.

[seanflyon]

You could make the same argument with paper money and I think the result would be similar. Theft might be a big issue, but that doesn't mean the system won't work.