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Comment by cromwellian | Hacker News Reader

Looks like a Bank Run? Bitcoin exchanges that engage in some kind of fractional scheme need insurance coverage. I don't know if Mt Gox is doing that, but it kind of smells like they don't have enough BTC on hand to allow withdrawls.

On the upside, Bitcoin seems like a perfect laboratory to re-run the experiments in banking leading up to the 1930s when you know, the "communist" FDR imposed banking regulations which are still hated today by some. :)

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How would they not have enough BTC on hand? It's not like they loan it out like banks.

By taking it.

Some could have been stolen from a compromised server.

> The US Department of Homeland Security and the Secret Service seized three accounts linked to Gox containing more than $5m. As research from The Genesis Block shows, the executed seizure warrant was dated 19th June, the day before Gox announced it would halt dollar withdrawals.

Not to mention they're a huge hacking target.

It might be non-trivial to get large amounts of cold storage BTC up and running? This could be a good thing in the case of cold storage coins, for security reasons.

They can have it stolen. They can covert it to USD and spend it on operations.

First we liked Bitcoin because it had low transaction costs. Then Bitcoin became more valuable, and we decided that we "need insurance coverage." Now we are headed back where we started: insurance isn't free, and it's sort of the main reason why other payment systems have higher costs.

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