In the cryptocurrency community there has been a lot of interest in the potential for decentral exchanges for various financial instruments (futures, stocks, etc.). This short article points on some crucial issues with regards to moving from a digital cash system to a more complete global economic network (econet).
Blockchain based P2P networks allows for unordered transactions (Tx). The transactions have a partial order as described by Lamport in 1978 in [1]. The blockchain can be seen as creating this partial order. While transactions in one block don't have an order, the blocks of tx themselves are ordered. The Bitcoin blockchain realizes Lamport's partial order, combining it with a undestructable datastore (see also [2]).
Unordered Tx means: if Alice sends 1 BTC to Bob (tx_1), and Charlie 1 BTC to David (tx_2), tx_1 and tx_2 are independent. tx_1 and tx_2 could be in the same block, or in different blocks. They are independent of each other with respect to time.
If Alice and Charlie would be Buyers and Bob and David Sellers on an open market of some good, this would be no longer the case. Say we have Alice buying 1 ounce of gold from Bob. Alice sends 1 BTC to Bob and expects delivery of the ounce of gold at a certain date, in a certain location. Alice could transact with David, and Charlie with Bob depending on the price mechanism. All 4 agents in the system interact in one global marketplace and the buyers and sellers are part of a collective providing the supply or demand. In other words the arbitrage principle applies to the orders. This can only happen if there is a certain degree of abstraction in delivers and security. For example if Bob is a very trust-worthy individual and David is not, the price is not uniform. That is why exchanges can be seen as a special kind of escrow party.
The price mechanism and block-chain are orthogonal principles. It can be applied if all transactions are based on the same good.
Bitcoin is a digital cash system, with no central authority. The transactions reflect the cash side of an economic interaction, not the delivery of goods or performance of a service, etc. If two parties interact with cash, the blockchain does not know of the other side of the transaction. Although it is partly possible to build escrow services on top of Bitcoin, in principle it is not known how this can be implemented across the global network. Transportation of goods, delivery of those goods are highly evolved mechanisms in the global economy which can not be replaced/improved easily. While local small scale experiments might lead to promising results it is unclear on what scale such systems can be used and how. Say some gold mining corportation would want to settle their annual production on a market. This requires extra-ordinary trust in a system. The exchange system however is far from perfect, and has some similar issues to the banking sector. An inquire by the hedgefund manager Kyle Bass showed the COMEX exchange only holds 4% in reserves for their obligations, see [3].
[1] http://research.microsoft.com/en-us/um/people/lamport/pubs/pubs.html#time-clocks