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#1 26-11-2022 15:04:51

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Binance introduces proof of reserves for Bitcoin

Binance introduces proof of reserves for Bitcoin

Yesterday, Binance, the world's largest cryptocurrency exchange by trading volume, launched proof of reserves (PoR) for its bitcoin (BTC) holdings in its latest show of transparency to reassure crypto traders of its health following the sudden collapse of exchange FTX.

A PoR is an independent, third-party audit that seeks to confirm that a digital asset custodian actually holds the assets it claims to have in store to secure client funds. The fall of the once highly regarded FTX is currently sparking renewed interest in PoR in the crypto community.

Merkle tree data
This new update comes two weeks after Binance released cold wallet addresses and balances for six of the 590 coins traded on its platform. Details shared by the first exchange showed that it has around 474,500 BTC, 4.7 million ETH, 17.5 billion USDT, 21.6 billion BUSD, 599 million USDC and 57 million BNB.

Yesterday, Binance said that it also allowed users to verify its BTC holdings with the Merkle Tree data structure. The exchange described the PoR for BTC as "the first interaction of the feature", adding that it will introduce verification for Ether, USDT, USDC, BUSD and BNB "soon".

"Binance also aims to work with an independent third-party auditor to validate Merkle tree data," the company said, adding that it has designed a new PoR site to show it holds client funds in full, with reserves.

"So, when a user deposits a bitcoin, Binance's reserves increase by at least one bitcoin to ensure that client funds are fully collateralised. People will be able to visit the site and see proof of Binance's reserves, showing its reserve ratio alongside customer debts," Binance adds.

A big business
In the statement, Changpeng Zhao, CEO and founder, describes the new project as "a massive undertaking". He adds that developing the data required for the majority of assets in the custody of the exchange takes a few weeks.

Given recent events, it is understandable that the community expects more from crypto exchanges, far more than what is currently demanded from traditional financial institutions. That is why we are happy to provide this latest feature for our users to verify their funds," Zhao explains.

The CEO assures that the firm is working to get the next update out as soon as possible to meet the expectations of the cryptocurrency community.

"Anything worth having is worth going for - all the way." - J.R. Ewing



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