I read recently (if not hoax) that Gav was suggesting a protocol addition so that you could prove and exchange has all the BTC it says it has.
Without something like this, I think all exchanges will yield to the temptation to fractional practice, by design or fault.
With it, it would make the btc side one of the safer ways to invest....with any entity as you can check at any tie their claims as to reserves.
No protocol extension is needed for this. The problem with relying on this methodology is let's say an exchange doesn't actually have your funds. What are you going to do now? You are still going to get Goxed.
A tool like this, whether a protocol extension or not, would allow customers to audit the exchange against the blockchain in real time. At least customers would be able to see the problem before it becomes a crisis (before 750,000 btc go missing).
