Quote from: justusranvier on March 04, 2014, 06:38:11 PM

Three problems:

1) Exchange operators, including operators and employees, might steal your bitcoins.
2) Exchange operators might lose the private keys to your bitcoins.
3) External attackers might compromise the security of the site and steal your bitcoins.

Since 2010, by far the largest problems are 1 and 3.

2 is something hypothetical that aren't even sure even happened.

Why is everybody talking about solutions to 2, especially solutions that do absolutely nothing to stop 1 and 3 (the ones we know happen all the time?)

Certainly. My suggested solution does very little to prevent theft and fraud. That is another matter entirely.

What my suggested solution does do is make it much easier for users to determine if the exchange is engaging in fractional reserve of the user's bitcoin deposits, and limits a single user's ability to use social engineering to convince an exchange to send them someone else's bitcoins.