I created a site that lets you view detailed information about Bitcoin blocks, addresses, and transactions.
This is a generally awesome tool. In addition to it's other uses, it will allow us to keep Mybitcoin.com and it's (presumedly less honest) future competitors from the temptation of fractional reserve nonsense. Just the threat that any Joe can run his addresses past block explorer and tell if his funds have been mixed with other accounts not his own, or otherwise borrowed without consent, should be enough to keep most on the up-and-up. Not that I don't have a fair trust of Mybitcoin.com, I do have an account that has been climbing in value as of late, but I also feel better knowing that I can check on my balances without having to trust the websites' honesty itself.
How does that work? You send coins to an address they gave you, then request a few back and the change goes elsewhere. Do they then send the change back to the address you know?
How does what work? Fractional reserve or auditing them with block explorer?
If you mean, how does one audit your addresses with block explorer, simply check the addresses that you have to make sure that there have been no transactions that you didn't do yourself and that the address balances add up to what you should have. If you have more than what you should have, then the website is sharing accounts among users and tracking the individual values internally. Which would allow the website owner to loan out portions of the pooled balance, much like how fractional reserve banks do now, since they don't actually keep your money on hand. If there has been any transactions in or out of said accounts that you didn't perform, then that means the website owner is using member accounts to "float" his own activities.
EDIT: Except I can't actually see all of the addresses used in my Mybitcoin.com account. That's going to be something I need to ask for.