The wallet files are internally encrypted where? The use of the term "P2P" (Peer to peer) implies that all nodes (users) have access to the database.
If the users (who are also servers) do not have access to the wallet files, why are they stored at all?
Did you read the whole entry? It is a P2P Server that uses an application stack. Users do not have access to the wallet files.
The users use accounts on the server. When you access gmail or yahoo mail do you have access to their internal processes?
It's a client-server model (but could be programmed to be web-based - i.e wordpress, cms, etc...). Ideally The users would have accounts on the servers.
If a user and his friends downloaded the server portion of the open source software then he could start his own P2P exchange network. He would have to generate/import his own certificates and keys to make sure that rogue servers from other users don't talk to his network. And he would have to secure the LAMP server to make sure none of the users accounts on his server would have access to his wallet banks.
If he wanted to connect to and interact with other trusted P2P networks then he would have to implement a P2P "bridge-server-node" which I will write about later. A bridge-server-node would allow other fiat converting sites (like btc-e, mtgox) to exchange fiat for cryptocurrency. Those sites would have to be trusted and and have certificates and keys implemented to transact with the P2P network.
Do you honestly believe that users would create accounts and send money to a P2P network with no trust model built in? Even bitcoin can only trust other bitcoin clients. Bitcoin clients do not talk to Litecoin clients. They only trust bitcoin. Similarly the P2P network you setup would only trust those that are part of your P2P network.
For example wikileaks could start a P2P exchange network that users all over the world could use. The people that setup accounts and send money would trust the founder of wikileaks with their money. But Wikileaks could have a bridge-server-node setup to transact with the P2P network that Piratebay has setup or Anonymous, or perhaps Mega's
Do you understand now?
If I use the analogy about the city bus that I posted earlier then think of the city buses as servers and the drivers of those buses as keys. The only ones who could drive the buses would be those who were given keys by the city.
If anyone else tried to drive one of their buses, they would not be able to simply because they do not have the keys to the bus.
If they tried to use their own bus and go from bus stop to bus stop trying to pick up people none of the people would get on their bus because most people know what a city bus looks like (city logo, etc..) plus the police would pull them over if they tried to.
Each P2P network would be its own self contained city. The people of that city would trust the mayor and city council of that city. In addition, the city could transact with other cities that they trusted (if they chose to do so). The citizens of that city could choose to transact with other cities that they trusted as well.I hope this help everyone to understand. I apologize for not being clearer.
(MORE TO COME LATER)