[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.

[ThomPete]

Perhaps perhaps not. It seems pretty early still to say anything with certainty.