Exchanges should provide private keys & have more transperancy!

[bitcoinmineey]

Taking a lesson from mtgox - Wouldnt it make sense that we demand private keys for any money we keep in an exchange, that way ensuring that our BTC is "safe" and under our control?

Also if companies like mtgox and coinbase arent even keeping the btc in the payment address accounts how can we know they have what they say they have!

Apparently they dont even promise that our bitcoins will stay in the addys linked to our accounts

https://i.imgur.com/OPITjzo.png

[Elwar]

Can't wait until you start your own exchange and implement this.

Watching.

[odolvlobo]

Taking a lesson from mtgox - Wouldnt it make sense that we demand private keys for any money we keep in an exchange, that way ensuring that our BTC is "safe" and under our control?
Also if companies like mtgox and coinbase arent even keeping the btc in the payment address accounts how can we know they have what they say they have!
Apparently they dont even promise that our bitcoins will stay in the addys linked to our accounts

Exchanges wouldn't be able to operate effectively if they didn't store customer's funds in the exchange's wallet.

Anyway, nobody is forcing you to keep your bitcoins on an exchange. The way to keep your bitcoins absolutely safe is to store them in your own wallet, and send them to the exchange when you want to sell them.

[OnTheMF]

From a technical standpoint it's difficult to disseminate private keys and/or keep them in the clients deposit address. For every trade on the exchange the coins would have to be transferred into or out of the accounts. This would require confirmations, making the money unavailable for quite a white in relation to the speeds market change. The transactions would incur fees or take longer to be confirmed. Traders already bitch and moan over how long deposits take.

The security issue is a big one too. The exchange needs to keep all of those wallet's private keys available to its automated processes. This means if the system was ever compromised an attacker could instantly transfer all coins out of the exchange. I believe the exchanges currently keep a certain float in an unlocked wallet, and the vast remainder in a cold storage wallet. That minimizes the risk and amount of coins an attacker could steal.

[justusranvier]

From a technical standpoint it's difficult to disseminate private keys and/or keep them in the clients deposit address. For every trade on the exchange the coins would have to be transferred into or out of the accounts. This would require confirmations, making the money unavailable for quite a white in relation to the speeds market change. The transactions would incur fees or take longer to be confirmed. Traders already bitch and moan over how long deposits take.

The security issue is a big one too. The exchange needs to keep all of those wallet's private keys available to its automated processes. This means if the system was ever compromised an attacker could instantly transfer all coins out of the exchange. I believe the exchanges currently keep a certain float in an unlocked wallet, and the vast remainder in a cold storage wallet. That minimizes the risk and amount of coins an attacker could steal.

This problem isn't as easy to solve as some people seem to think.

Fortunately there are people working on comprehensive solution.

[franky1]

exchanges use databases representing funds. the orderlines are OFFCHAIN

the order lines on exchanges are from a database not a blockchain. for them to process hundreds of orders a minute ONCHAIN swapping peoples balances and fully confirmed would cause so much issues. also to note it would cause scammer risks too. where people deposit funds, then import the privkey in their client to move funds back out and then claim that funds were stolen. (several other plausible scenarios could be done)

the funds are swept to a central pot to make it easier to control withdrawals. so providing you a private key of your deposit address would be useless.

the best thing possible would be for PEOPLE to stop using exchanges as long term banks
the best thing possible would be for exchanges to be legit, have a non PO BOXed office address, phone number, etc and to do what legally right and morally right.
the best thing to do if your funds are withheld is to file a court case against the exchange instead of crying on a forum

[freebit13]

exchanges use databases representing funds. the orderlines are OFFCHAIN

the order lines on exchanges are from a database not a blockchain. for them to process hundreds of orders a minute ONCHAIN swapping peoples balances and fully confirmed would cause so much issues. also to note it would cause scammer risks too. where people deposit funds, then import the privkey in their client to move funds back out and then claim that funds were stolen. (several other plausible scenarios could be done)

the funds are swept to a central pot to make it easier to control withdrawals. so providing you a private key of your deposit address would be useless.

the best thing possible would be for PEOPLE to stop using exchanges as long term banks
the best thing possible would be for exchanges to be legit, have a non PO BOXed office address, phone number, etc and to do what legally right and morally right.
the best thing to do if your funds are withheld is to file a court case against the exchange instead of crying on a forum

Exactly, many don't seem to grasp this, not much difference here to how banks just 'make up numbers'... what's preventing them from selling you coins that don't exist... you'll never know until you try to access them... or is that what's happening right now? Doesn't look much different from a good old fashioned bank run.

[justusranvier]

Exactly, many don't seem to grasp this, not much difference here to how banks just 'make up numbers'... what's preventing them from selling you coins that don't exist... you'll never know until you try to access them

That's why you need more than just a database to do this right - you need a cryptographically-secure accounting system and verifiable auditing.

That's Open-Transactions.

Anyone who wants to solve this problem is going to have to reinvent all the work they've done, and they have a head start. All OT needs is add a few missing pieces to handle the bitcoin side of the equation and they'll be done.