1. Gateways (à la Ripple)
Though exchanges themselves are decentralised, the "coloured coins" they exchanged need to be issued by a trusted (centralised) authority who will exchange for example 10EUR/USD for 10cEUR/cUSD which can THEN be exchanged for BTC or other currencies.
I think this is the most promising approach IF we can get truly serious player involved in this.
Ideally, a company which owns underlying assets should be 100% isolated from trading and other activities. Basically, it should be a trust (ETF-like) which simply owns USD and does nothing. Companies responsible for market making are not crucial to back the currency.
That is how things like e-Gold work(ed). People tend to regard that as centralisation thus deprecate it (around here where we are supposed to be all about decentralisation).
It is how I have tried to set up my Digitalis Open Transactions server. Ideally I do not want to ever dig up my cold-stored assets that the tokens people are trading represent, my hope is that they stay frozen forever, basically until there is not perceived/anticipated to be any future use for the tokens, that is, until there is no longer going to be any trading in that asset thus no need for tokens representing that asset thus no longer any need for a Fort Knox or Fortress of Solitude or whatever "stone cold frozen" cold storage of that asset. As that point, when trading in that asset is being shut down, maybe centuries into the future, the actual assets would get dug up and handed out to the owners at that time of the tokens that represent them.
This model totally separates the function of permanent storage of hopefully never again to move assets from the function of providing liquidity of the tokens that represent those assets.
That is, like e-Gold did, I want the whole buying and selling of those tokens aka of ownership of portions of those assets, to be a distinct different business, hopefully run by third parties.
One effect of that approach is that it is always at least 100% reserves, and usually more than 100% since only assets in excess of the 100% actually move, the 100% is frozen "forever", only unfrozen when the whole business shuts down aka when there are no plans to enable any more trading of that asset.
For things there is a limited number of in existence, such as bitcoins, this permanent freezing approach should even actually increase the value of any of that asset that has not yet been frozen into our reserves forever so that we could issue tokens representing it. Though if a majority of coins were to be frozen it would probably be best to have many servers/entities operating on these principles but run by different entities so people don't start thinking of the coin as one that is almost wholly owned by one server/token/trading company or entity.
The big problem with that whole approach is all the legal mumbo-jumbo vulnerability though if some regime somewhere decides for whatever reason that it wants to confiscate the assets or shut down trading of the assets. An ETF has a certain kind of possibly illusory resistance to such disasters, but then again didn't people in places like Cypress and people who put money in places like Cypress also imagine that having paperwork somehow made their assets safer?
Then we can add an insurance layer: if both market makers and trust fail, insurance company will step in and compensate.
Presumably an insurance layer would kind of amount to additional reserves over and above the 100% reserves? Ideally maybe there would eventually be at least a 100% reserves in the insurance fund over and above the 100% reserves originally and permanently frozen back when the tokens corresponding to that initial frozen reserve was issued. But that would presumably depend upon fees/income of some kind, some of the "profits" that the original frozen-forever reserves are "earning" by means of their existence being an enabler of confidence in the tokens would go into the "insurance" reserves, something like that?
I kind of envisioned maybe other well known people in the community would act as market-makers buying and selling the tokens and that each of them would hopefully, even probably, have at least as much reserves themselves as my original frozen-forever reserves that originally determined and fixed the total number of tokens in existence. Thus that any one of them could if they chose buy the entire total lot of all the tokens that exist. What I ended up with was a realisation that the total number of tokens that exist is basically the bandwidth of a pipeline; you can only transact that much value in any one transaction. So you need velocity, circulation, if lots of trade is to be enabled by just the fixed number of tokens that exist. But the advantage is you don't have hot wallets as part of the "reserves". The "reserves" are totally stone cold dead, our descendants will dig them up some century when they no longer intend to trade in that asset so they dig it up to melt it down or burn it or maybe they just leave it to rot and turn into fossils even.
(The "reserves" are in that way like that big round stone that fell into the ocean but still was useful as money because they could still change who owned it whenever they needed to, the fact no one could actually touch it visit it carry it etc was of no importance it seems. We have submarines and salvage corps now that could raise that stone from the ocean though if someone still after all this time wanted to move it...)
-MarkM-