4 ms·
It is important to know that this scheme is NOT foolproof without further evidence. If one or more depositors are collaborating with the exchange owner, the ow
by karl_gluck 13y ago
It is important to know that this scheme is NOT foolproof without further evidence.
If one or more depositors are collaborating with the exchange owner, the owner can simply not include their balance in the "proof", but make an agreement that they would be paid first from the exchange's pool.
The exchange can still be insolvent without proof of all of the total deposits made in all accounts at the exchange. If depositors collaborate to hide their balance, this is very difficult.
- nullc 13y agoThis can be seen as a variation of the general risk that goes like: Site proves balances, a moment later site takes backing funds to vegas. The proof shows funds, but it doesn't show what they'll do a moment later. It's still a massive step forward from the current conditions, but doesn't mean that people shouldn't avoid putting their funds in third party hands.
- michaelt 13y agoPresumably the exchange reports the bitcoin addresses for their wallets alongside the proof, so you can look at the blockchain and confirm the balances match. So you know your bitcoins haven't been taken to vegas yet. Of course, this doesn't provide any security for deposits in conventional currencies, and doesn't stop the exchange just taking the money and running.