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Comment by xorcist | Hacker News Reader

To start with, store most funds offline. A bank run (or hack) should be subject to intervention by a human. Contact customer if there is any doubt. Implement checks and limits for the remaining balance. Regularly audit and publish cryptographic proof you are in control of funds.

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> Regularly audit and publish cryptographic proof you are in control of funds.

What good is that proof of control? Literally the next second it could be drained and no one would know until the next scheduled proof of control. I've never been sure what publishing proof of control is meant to protect against exactly.

It would protect against what happened with MtGox -- if, after losing some but not all customer funds, they tried to keep running the site to make back the money. It would protect you from putting money into a site that is already bankrupt.

Ah good point. But then how do you verify their figure on total customer deposits?

If privacy is not a concern, you can just publish a list of your liabilities at a given time. Each account holder can then verify the their own listing, calculate the total, and compare to the proven reserves.

There are more sophisticated schemes that allow you to check the amount in your account, and verify that your account was included in the total, without seeing the size of other accounts: https://iwilcox.me.uk/2014/proving-bitcoin-reserves .

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