Hi eric,

I liked the post and read it with much interest. But I have some questions.

1) How could MtGox realistically produce "fake" bitcoins? Doesn't the algorithm insist that each transaction be validated independently?

I am a relative BTC noob and may be mistaken, but from what I understand about the block transaction chain, the scenario you describe would be very difficult to pull off. It would indicate that the majority if not all of the Mt Gox transactions are fraudulent to have any chance of success. A pretty wide-ranging conspiracy would be needed, and most of us know that wide-ranging conspiracies tend to fall apart very quickly.

On the other hand, the possibilty that MTGox is over-extended is very real. I don't know at what point MtGox needs to publish accounts, submit to auditing etc. but up until now no one has officially suggested that this needs to take place (other than the Feds who beat him up for 5 M$). If MK has about 250 million USD in bitcoin (that is the last estimate I heard) he can still cover a large amount of any loss caused by potential bad bets. If he really wanted to make people feel better about MtGox Bitcoin, he would start by telling the world how much he has invested in bitcoin and how much is tied up in fiat. Anybody with that much money can afford to pay the people needed to fix any lingering technical issues.

On the other hand, I do agree with many of the posters here, Karpeles has not been using very good PR, and sometimes acts like an emotionally stunted geek when it comes to assuaging his customer bases' deepest fears. He badly needs a PR manager and probably some good accountants.

Let's stay tuned,