I had this idea, too. The problem is exactly what you have stated. Then you have "trusted" nodes that hold the physical asset in hock until someone buys it. A bank, of sorts, to hold your valuables. This bank (and its associated trust) would issue the coinage once it receives the item in question.
Obviously the bank charges you for holding onto your goods (they have to make money somehow) and for the privilege of issuing you cash.
Then, you have to know your banker. Can you trust Muhammid from down the street to issue your coin? Maybe. 3rd party services would pop up, telling you whether a certain issuer had defaulted on delivering some hard good. Turns out Muhammid is a stand up guy, and he delivers when people come calling. So he takes your couch and sends you 799 LegitCoin.
Now Muhammid has options. He doesn't have to hold onto the couch. He has a couch that he valued at 799LC, but maybe he knows someone who would buy it for 815LC. This depends on whether the exchange is a loan or a sale.
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And what happens if you come back to Muhammid and he doesn't have your asset? Now you tell one of those 3rd party services. If there's a run on Bank Muhammid, and he defaults on everything, his coins are worthless. Now every coin he issued on the network is worthless. Just like small banks in the Western United States before we had the dollar.
Technically speaking, that means any node on the LegitCoin network can mint a node-specific coin. The value of that coin is not locked against any other coin. This necessitates exchanges and means to evaluate the value of said coins against each other.
Because of the cost of holding goods, most banks will hold high value assets; gold, land, rare goods, etc. And, because of the cost of holding those goods, only wealthier individuals will be able to trade assets for LegitCoin.
[/edit]
And so on. Crypto is simply reinventing existing monetary schemes.
Obviously the bank charges you for holding onto your goods (they have to make money somehow) and for the privilege of issuing you cash.
Then, you have to know your banker. Can you trust Muhammid from down the street to issue your coin? Maybe. 3rd party services would pop up, telling you whether a certain issuer had defaulted on delivering some hard good. Turns out Muhammid is a stand up guy, and he delivers when people come calling. So he takes your couch and sends you 799 LegitCoin.
Now Muhammid has options. He doesn't have to hold onto the couch. He has a couch that he valued at 799LC, but maybe he knows someone who would buy it for 815LC. This depends on whether the exchange is a loan or a sale.
[edit]
And what happens if you come back to Muhammid and he doesn't have your asset? Now you tell one of those 3rd party services. If there's a run on Bank Muhammid, and he defaults on everything, his coins are worthless. Now every coin he issued on the network is worthless. Just like small banks in the Western United States before we had the dollar.
Technically speaking, that means any node on the LegitCoin network can mint a node-specific coin. The value of that coin is not locked against any other coin. This necessitates exchanges and means to evaluate the value of said coins against each other.
Because of the cost of holding goods, most banks will hold high value assets; gold, land, rare goods, etc. And, because of the cost of holding those goods, only wealthier individuals will be able to trade assets for LegitCoin.
[/edit]
And so on. Crypto is simply reinventing existing monetary schemes.
Everything old is new again.