Re:An $814M Mystery Near the Heart of the Biggest Bitcoin Ex...
by gmueckl on Tuesday December 05, 2017 @11:50AM
(#15852991)
Not true. A simple recipe for manipulating Bitcoin supply by acting as a bank:
1. Create accounts for customers. Balances are private and not connected to wallets
2. Keep Bitcoins used to cover the accounts in a single bank wallet.
3. Rely on the observation that customers won't withdraw all their Bitcoins at the same time and use bank wallet for trading in the bank's name.
This is basically how every normal bank in the world operates, except that the amount of money the have to keep in reserve is heavily regulated so that this scheme does not turn into an infinite pool of money. There is no such regulation for cryptocurrencies.
1. Create accounts for customers. Balances are private and not connected to wallets
2. Keep Bitcoins used to cover the accounts in a single bank wallet.
3. Rely on the observation that customers won't withdraw all their Bitcoins at the same time and use bank wallet for trading in the bank's name.
This is basically how every normal bank in the world operates, except that the amount of money the have to keep in reserve is heavily regulated so that this scheme does not turn into an infinite pool of money. There is no such regulation for cryptocurrencies.