That being said however.. if Karma just becomes just another asset being traded on the NXT exchanges and a huge chunk of Karma gets lost if NXT collapses.. then I am not so worried at all because it takes a whole chunk of coins out of circulation. which means the value of everyone else's karma goes up.
I'm not sure how NXT works or how Karma would be taken out of circulation but if an exchange like Mintpal with multiple currencies were to collapse and a formal appointment was made to the collapsed entity it would most likely mean that all the coins on that exchange would be put up for sale. For Karma that would mean over 10 billion Karma would go up for sale.
Chargin.
with a fully registered centralized exchange controlled by a legal entity that's partially true...
however a lot of these exchanges are not registered businesses and then they collapse the operators simply disappear.
does anyone know what happened to the coins that were on coinmarket.IO or cryptorush? sure they might have been sold on the black market but they could have just as easily been moved into cold storage where they can't be traced (ie taken out of circulation).
as for the nxt decentralized exchange I am not a NXT exchange guru but one would assume that if the tokens that control those coins are lost ie. if the network is disabled/disbanded or compromised then the Assets they represent can also be considered lost.
in other words.. if you list or trade an asset on any exchange, you have to give up complete control of that asset.
if that exchange is decentralized and its underlying blockchain fails for whatever reason, then all assets controlled by that exchange are considered non transferable. this is because every trade or transfer of assets etc is done on the block chain itself, so no blockchain no transactions (nothing in, nothing out, nothing recovered), unlike a centralized exchange where all trades are done off block chain.
now you could argue that the devs could simply roll back the blockchain like VRC did to save their network.. and yes they can.. but if they do it once then they open pandoras box and shake community faith in the network itself so its catch 22.. damned if they do and damned if they don't.
the bottom line for me is...
do I want all my Karma being placed on another network and relying solely on it for security? Not really..
do I care if people put their Karma on another network and rely on it for their security? Not really..