After reading the question
What are ways a BTC Exchange could steal from its customers, and how can they protect themselves?, it would seem that you can't really trust the big exchanges (or anyone) all that much. This begs a few questions:
- How do we know that the big exchanges aren't manipulating the price of bitcoin?
- Is there really any safe way to acquire bitcoins without mining them yourself?
- Even if they (for some reason) can be trusted, is there any reason at some point they couldn't do fraudulent things? Mt.Gox apparently handles over 80% of bitcoin trade, and so it seems like they would conceivably be able to move coins between random addresses that they own, and then claim these movements were transactions above market price. They would then be able to inflate the value of bitcoin (at least on Mt.Gox), and then the other exchanges would find their prices moving to match that on Mt.Gox. What's stopping them from doing this?
- Why is Mt.Gox the largest exchange? I feel like people would have a harder time trusting a company in a foreign country.