The Mt. Gox Fiasco

I have heard only 2nd or 3rd hand rumors but it appears to me that the loosers held not Bitcoins but promises by Mt. Gox for Bitcoins. It seems that Mt. Gox internal software was not well designed to track their own reserves. Fraud within Mt. Gox cannot be ruled out yet.

I do not understand why people would trust someone else to hold their money for them—indeed an unregulated institution with few political friends. Bitcoin is designed to be owned directly. It may not be trivial to hold the secret ECDSA key, but it is much safer than storing gold under your bed.

I don’t know who knows the Bitcoin public key for Mt. Gox but one idea is to publish the public key for any ‘bank’ dealing in Bitcoins. Then external auditors can track the money.

Knowing Mt.Gox’s public key should be a requirement of any Mt. Gox depositor.

Here is the recommended way to have Bitcoins.