The current problems with Collateral in terms of physical assets are that they use old fashioned ways for 'proof of stake' as any asset (such as a home/car/things of significant value) currently use receipts and non-digital proof of purchase, I agree that the current system does need to improve but In the future purchase proofs will become digitized (much like receipts changed from written scripts in the middle ages to printed and tagged 'official documents' now.), once these become digitized it will be much easier to put up physical collateral in the form of deeds/receipts with certified digital proofs of purchase.
In terms of debt and debt-obligations I completely agree, the problem today is that even governments are taking massive loans and are themselves in debt and I have no idea how this would be solved even if cryptocurrency didn't take over; as at some point if everyone can just increase their own debt then we will be in a state of hyperinflation from debt and all currencies will become worthless.
For stability, this is mainly because of public perception, people do not think of cryptocurrencies yet as a 'foreign exchange currency' like the rest of currency pairs, they in fact treat it like an asset/stock which thrives on growth and holding mentality rather than necessity of use (Ie. Wanting to go to Europe and needing Euros), cryptocurrencies will begin to stabilize once they are accepted throughout the world as a legitimate form of currency as trading between the pairs will be as consistent as fiat currency and hence the large volumes on both SELL/BUY will cause the massive swings to dampen.
RE: The problem with Cryptocurrency that no one is talking about. Loans.