Re:Joint Statement Regarding the Insolvency of Mt. Gox
by jasomill on Tuesday February 25, 2014 @02:12AM
(#7296139)
MtGox isn't supposed to be a fractional-reserve Bitcoin bank, so, modulo server capacity problems and modest transaction delays due to offline Bitcoin storage, why, in principle, should everyone wanting their Bitcoins at the same time pose a problem?
Re:Joint Statement Regarding the Insolvency of Mt. Gox
by rahimnathwani on Tuesday February 25, 2014 @05:03AM
(#7296665)
You are right.
My point about solvency was a general one (applying to all people and companies) but I overlooked an important point: the Bitcoins entrusted by customers to MtGox do not become MtGox assets. The Bitcoins are always owned by the customer (not owed to the customer). They are less like bank deposits than they are the contents of safety deposit boxes at a bank branch.
Re:Joint Statement Regarding the Insolvency of Mt. Gox
by icebraining on Tuesday February 25, 2014 @05:01AM
(#7296654)
The idea is that they would prove their solvency for the hypothetical event of everyone wanting their money back at the same time.
Solvency, the ability to pay what you owe people when it falls due, is easy to prove at any point in time. The state of insolvency occurs the first time you have an obligation to pay, which you cannot satisfy.
The thing is, if you're a de facto bank (by virtue of holding customer demand deposits) then your future expectations of solvency could turn out to be wrong because everyone wants their money at the same time (i.e. there's a bank run).