On: Mt. Gox knowingly traded non-existent Bitcoins for...

[chii]

interest bearing loan has nothing to do with the "reserve" you need.

if i borrowed 1 bitcoin from you, and then i default, then how are you going to pay back that bitcoin to whoever deposited it?

[dredmorbius → chii]

Same way you don't get back the exact serial-numbered dollars you loan (deposit) to a bank. It's not the _identity_ of the bitcoin which matters, it's the value.

If you want a lockbox, get a lockbox. If you want a deposit account, you're storing and retrieving fully fungible and interchangeable entities.

[ohashi → chii]

From the profits earned off of other borrowers. Like banks do.