Many of you might think I'm just trolling based on previous posts, but no sadly I'm not. I'm just bringing up some very serious issues that should be dealt with NOW rather than later.
An exchange uses a database to store everyones information, such as the amount of BTC you have. Say the exchange has 1000 BTC total from a spread of 100 users. Someone hacks the database (or the site/owner changes the database) and adds a user and sets his BTC amount to 1000 BTC -- even though those BTC don't actually exist.
This user can now proceed to sell, buy, cashout ect. -- All without being noticed as long as more and more users use the site. Now, if one day the user base becomes too low or everyone decides they need to cash out -- IT WILL NOT BE POSSIBLE.
A system in place needs to be acted upon on all the exchanges ASAP. I call upon them to do this for the safely of BTC and its users.
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When a user registers an account, they need to be assigned a permanent bitcoin address that the user can send BTCs to, and request to withdraw BTCs from.
This prevents a database to become compromised with BTC amount because the bitcoin address can be looked up at any time on blockexplorer to see the amount of BTC that address carries.
When users buy and sell BTC, information on every transaction needs to include the bitcoin address of the user those bitcoins were bought from -- again so anyone can verify they are legit.
The above basically creates a system anyone can verify is legit.
The next problem is verifying if they actually have all the cash. I can't really think up a good solution for this than to have trusted 3rd party check the financial information -- which is much needed.