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You give your BTC to MtGox. At this point, you no longer hold your BTC. You have exchanged BTC for a MtGox-denominated currency that is ostensibly convertible
by hapless 13y ago
You give your BTC to MtGox. At this point, you no longer hold your BTC. You have exchanged BTC for a MtGox-denominated currency that is ostensibly convertible to BTC.
At that point, nothing stops MtGox from operating a fractional reserve bank. Or just stealing your deposits.
Substitute any other "exchange" name for MtGox. The principle is the same.
- antr 13y agothat's is not fractional reserve banking. on top of that, yo required another currency (another risk), a requirement you don't need with the current system