As others have noted, there are scaling issues with moving every single transaction out into the blockchain. Luckily, this is not needed. An exchange can prove

As others have noted, there are scaling issues with moving every single transaction out into the blockchain. Luckily, this is not needed. An exchange can prove that it holds all the bitcoin it claims to, and each induvidual account holder can verify the proof as it pertains to their own coins. See this for example: https://iwilcox.me.uk/2014/proving-bitcoin-reserves https://iwilcox.me.uk/2014/proving-bitcoin-reserves Hopefully users will start to insist on these kinds of things in the future.