31–40 of 79 posts
Or, just use a system like we use on Bitalo, where fractional reserves are impossible because of use of multi-signature Bitcoin addresses, which means funds are specifically tied to user wallets and exchange operators cannot use them without user's signing all transactions by himself.
What bitcoin exchanges do HN readers trust? I've been using http://coinmkt.com I regrettably used MtGox.com. I'm kicking myself now.
Or, just use a system like we use on Bitalo, where fractional reserves are impossible because of use of multi-signature Bitcoin addresses, which means funds are specifically tied to user wallets and exchange operators cannot use them without user's signing all transactions by himself.
Or, just use a system like we use on Bitalo, where fractional reserves are impossible because of use of multi-signature Bitcoin addresses, which means funds are specifically tied to user wallets and exchange operators cannot use them without user's signing all transactions by himself.
While systems like that have many applications— and should be used where they can, they aren't a replacement for large scale markets like MTGox or for ultra-low-cost instant payment systems.
Can't all of this information be found in the block chain if you know the addresses the exchanges are using?
At first I was worried of what would happen if the exchange introduced fake nodes with negative balances at the bottom of the tree, but there would be no way for them to hide that without the first real customer up to the root finding out (there would have to be a negative node that he/she could see). This sounds like a great idea!
You also must make sure that all customers are seeing the same root, and that you can't do funny business like constantly update it to swap out which customers you're robbing. (e.g. it should be a daily or weekly updated thing).
Earlier quoted context omitted.
> You do realize that modern finance depends on this notion? Modern finance also causes some very serious societal problems, in my opinion.
We're using the word "modern" extremely broadly in this context. Fractional reserve banking goes back to what, the early Renaissance? Did the economies of the Middle Ages really serve people better than our economies do today?
And arguably, the invention of dual-entry accounting in the early Renaissance -- a self-auditing system similar in many ways to nullc's proposal -- played a much bigger part in the beginning of modern economic development than did fractional reserve banking.
Earlier quoted context omitted.
Right? Banks making loans? It's preposterous .
Sigh. It's a fallacy that making loans implies fractional reserves as normally understood. Banks can still make loans simply by offering certificates of deposit. This is the above-board way of loaning out people's money -- you make it absolutely clear that taking it out early has a cost, because the money is locked up in (hopefully) profitable ventures. Would that be less profitable for the banks? Not really -- they…
That doesn't really sound like a better alternative.