So I've been thinking a lot about the scalability issue, and perhaps I've got a solution. It's not elegant, but it might be a solution.
I should preface this by saying that I do not have a degree in computer science nor a background in distributed systems or cryptography, and I should not be taken seriously. I have contributed a total of zero lines of code to anything Bitcoin-related. Those of you who do know what you're talking about: please shoot this full of holes as appropriate.
With that out of the way: one of the proposed solutions to scalability is centralization, which is undesirable because it trades Bitcoin's best features for convenience. Another is the multi-chain solution, which is undesirable because it makes already hard-to-use Bitcoin even more confusing to newcomers, and makes price-setting very hard.
I propose a hybrid of both. Rather than a central institution, a central blockchain that ensures commission-free, stable exchange rates between an unlimited number of compatible blockchains.
Let's call it MasterCoin.
This is quite different from any other coin that has ever existed. It is mined like any other coin - this is, of course, where the computational power comes from - but you cannot execute peer-to-peer transactions with it short of giving someone else access to your wallet. Instead, one pool of alt-coins is maintained at a single, public address on the blockchain of every compatible alt-coin. This is where chain "compatibility" comes in: the associated blockchains must recognize this pool of coins, and execute disbursal from it based on the instructions from the MasterCoin blockchain (meaning compatible coins must constantly poll the blocks in the MasterCoin chain). Obviously no coins like this exist yet, so they would need to be created (or existing coins would need to be dramatically overhauled).
The only things you can "buy" (or sell) with MasterCoin are these alternative coins. The trade prices will be dynamically handled by supply/demand algorithms and published in every block. Once MasterCoin becomes established, these coin reserves will permit free and fair exchange between any two coins, since the shrinking of one coin reserve will result in a dramatic price spike. A mature MasterCoin should be able to handle market swings gracefully, just like a traditional forex market.
This allows prices to be confidently denominated in MasterCoin. The currency actually used to pay debt is irrelevant, since all compatible coins are made fungible.
Any thoughts?
I may have misunderstood but it seems that when you boil it down to its essence what you are talking about is a decentralized cryptocoin exchange. A decentralized cryptocoin exchange would be very helpful indeed.