Binance, the world’s largest Bitcoin and altcoin exchange by trading volume, today released its proof-of-reserve (PoR) system, which it says is “the next step in its commitment to transparency and increasing trust in the ecosystem.” Here are the details…
Binance releases its PoR system
According to the official announcement, the launch of the PoR system first starts with Bitcoin (BTC). Other tokens and networks will be added in the next few weeks. “When we say Proof of Reserves, we are talking about assets we hold specifically for users,” Binance said. “This points to Binance funds covering all of our user assets in a 1:1 ratio,” he said. It also “means we show evidence that we have some reserves,” he added. In addition, the exchange drew attention to five more cryptocurrencies besides BTC. He used the following statements in his tweet:
As part of our commitment to transparency, we have provided new updates on Binance’s Proof of Reserve. More updates for ETH, USDT, USDC, BUSD and BNB are coming soon. Stay tuned.
Previously, Binance provided a snapshot of account balances and their own Bitcoin reserves on the night of November 23. The exchange claims to have 582,485 BTC in reserves, while its users have a net balance of 575,742 BTC. This gives Binance a 101 percent reserve ratio.
What are the ways to validate entities?
Users can also verify their personal Bitcoin holdings on the trading platform via a provided link or via Binance’s own Merkle Tree, a cryptographic tool that combines large amounts of data into a single hash. As explained by Binance, users can click “wallet” and then “audit” after logging in to the exchange.
In a statement, Binance gave advice to “those who want to go one step further.” Those who want to independently verify their funds, according to the exchange, can copy the source code into the Python application. So they can cross-reference,” he said. Binance also said it plans to involve third-party auditors to control the PoR system and implement zero-knowledge proof technology (zk-SNARKs/zero-knowledge). This is a move that aims to “enhance privacy and robustness and prove that the total net balance (USD) of each user is not negative”.
It all started with the collapse of Bitcoin and altcoin exchange FTX
The news comes after rival exchange FTX crashed earlier this month, as we reported on Kriptokoin.com. This has resulted in many other trading platforms promising to provide “full transparency” through Merkle Tree. Binance previously released a snapshot of hot and cold wallet addresses as of November 10. CEO Chanpeng Zhao later revealed that the exchange is working on implementing a new proof-of-reserve protocol developed by Ethereum co-founder Vitalik Buterin.
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