Binance Releases Proof of Reserves System For Bitcoin says others ‘Coming in the Near Future’
The largest exchange by trading volume, Binance, announced today, Nov. 25, in a blog post that it has launched a proof of reserves system for its users using a Merkle Tree, which will also be subject to verification by a third-party audit agency. The exchange will commence with Bitcoin reserves, followed by other ecosystems. Binance says this is their ongoing “commitment to transparency.”
As part of our ongoing commitment to transparency, we have provided new updates on #Binance’s Proof of Reserves.
— Binance (@binance) November 25, 2022
- Binance announced today, Nov. 25, in a blog post that it has launched a proof-of-reserves system.
- Binance also showed itself as the forerunner in the market by committing $1b to the crypto industry recovery fund.
Proof Of Reserves Boosting CEX Confidence
With the recent FTX collapse, centralized exchanges have been under fire to publicize their reserves to avoid a repeat of what almost brought the crypto market to a standstill. Binance was one of the first companies to disclose its proof of funds. On Nov. 16, a week following the incident, Bitfinex, OKX, KuCoin, and Crypto.com also disclosed their reserve wallet addresses along with Bybit.
According to Binance’s announcement, the Proof of Reserves will start with the flagship cryptocurrency, BTC, and other networks and tokens will come in weeks from now. The exchange provided a snapshot of its BTC reserves as of November 22, 2022, 23:59, showing a Reserve Ratio of 101%, an On-Chain Reserve of 582,485.9302 and a customer net of 575,742.4228 BTC.
In the early hours of today, Binance also showed itself as the forerunner in the market by committing $1b to the crypto industry recovery fund after committing an earlier $1b yesterday, which totalled $2b. Other industry players have also shown commitment in this regard.
Confidence in CEXs have been down bad lately, as market share shift to DEXs.
Will these moves positively impact market sentiment?
— Crypto Cash Flow (@_CryptoCashFlow) November 25, 2022
Verifying Bitcoin Holdings
Users may use a link supplied or Binance’s own Merkle Tree, a cryptographic mechanism that condenses a lot of data into a single hash, to check their own Bitcoin holdings on exchange.
According to Binance, users may click “wallet” and “audit” after entering the exchange. This will provide a special record ID that verifies that assets are covered as well as the users’ asset balance at the moment of the audit.
In a statement, Binance added that users who wish to take it a step further and independently verify their funds might put the source code into a Python program and do so.
The FTX debacle has caused many to lose faith in centralized exchanges and, even more so, the crypto industry. Binance and other industry players believe that by introducing the Proof of Reserves to the industry, the tides might again turn in favour of these exchanges once again.