Blockchains cannot control altcoins from other blockchains, which is why we still need to deposit altcoins at centralized exchanges to trade between them. In return the centralized exchange gives us an IOU for our deposit, and we have to trust that the exchange is honest and competent. These exchanges rarely insure their users' deposits with an equivalent value of something else, so if they do go tits up then there is no way to compensate the users.
Well here is a way to fix that, and add even more value to BitShares X.
Users of BitSharesX could register to be custodians of altcoin deposits. They would be required to hold 200% of the equivalent BitAsset to the altcoin. For example if a custodian holds 20 BitBTC, he can be trusted to hold 10 Bitcoins worth of user deposits. Once a custodian has registered that 20 BitBTC as collateral, the system can accept Bitcoin deposits directly from users. There would have to be a 3-way escrow system in the event of the custodian and depositer not agreeing.
Once a deposit has been recorded, the custodian's BitBTC is locked into the system until it is no longer required to insure against deposits. Users who own BitBTC can request that it be redeemed in return for a withdrawal of real Bitcoin. Withdrawals of Bitcoin will reduce the custodian's collateral requirements and allow them to get their BitBTC back if they wish. BitBTC is now not just a derivative, its an IOU for real Bitcoin.
This is the beautiful bit: if a custodian does mess up and lose customer deposits, his 200% BitBTC collateral can simply be claimed for compensating the Bitcoin IOU holder. BitSharesX then becomes the world's only provably insured altcoin exchange. Deposits can also be stored by multiple custodians, the more the merrier.
We could even have a frontend website similar to PeerTracks so that the user can trade altcoins without even knowing that he is actually using a blockchain.
Is this the nail in the coffin of centralized altcoin exchanges ?