Binance Launches Proof of Reserves for Bitcoin
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Binance, the world’s largest cryptocurrency
exchange by trading volume, on Friday launched the Proof of Reserves (PoR) for
its Bitcoin (BTC) holdings in its latest show of transparency to reassure
customers of its health following the sudden collapse of top cryptocurrency
exchange FTX.
A PoR is an independent audit conducted by a
third party that seeks to confirm that a digital asset custodian truly holds
the assets it claims it has in reserves to secure customers’ funds. The fall of once-beloved FTX is currently driving renewed interest in PoR in the cryptocurrency community.
As part of our ongoing commitment to transparency, we have provided new updates on #Binance’s Proof of Reserves.
Further updates for $ETH, $USDT, $USDC, #BUSD & #BNB will be coming in the near future.
Stay tuned.
— Binance (@binance) November 25, 2022
Merkle Tree Data
The new update comes two weeks after Binance published the
cold wallet addresses and balances of six of the 600 coins traded on its
platform. Details shared by the top exchange showed that it has
about 475,000 BTC, 4.8 million ETH, 17.6 billion USDT, 21.7 billion BUSD, 601
million USDC and 58 million BNB.
In a statement shared with Finance Magnates on
Friday, Binance noted that it has also made it possible for 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.”
A Merkle Tree is a cryptographic tool that enables the consolidation of large amounts of data into a single hash.
On #Binance, you can use Merkle’s Trees to verify your #Bitcoin is held 1:1, and you can have it verified by a third-party audit agency.
Here’s how it works ⤵️ pic.twitter.com/ZH1DN27jWO
— Binance (@binance) November 25, 2022
“Binance is also working to onboard an
independent third-party auditor to validate the Merkle Tree data,” the
exchange said, adding that it has designed a new PoR site to show that it holds
client funds in full, with reserves.
“So, in simple terms, when a user deposits one
Bitcoin, Binance’s reserves increase by at least one Bitcoin to ensure client
funds are fully backed. People will be able to check the site and see Binance’s
Proof of Reserves, showing Binance’s reserve ratio alongside customer
liabilities,” Binance explained.
‘Massive Undertaking’
In the statement, Changpeng Zhao, Binance’s CEO
and Founder described the new project as “a massive undertaking.” He added that
developing the data required for the majority of assets under the exchange’s custody
requires a few weeks.
“Given recent events, it is understandable that
the community will demand more from crypto exchanges, far more than what is
currently required of traditional financial institutions. That’s why we are
pleased to provide this latest feature for our users to verify their funds,”
Zhao explained.
The CEO assured that the firm was working to get
the next update out as quickly as possible to meet the expectations of the
cryptocurrency community.
Binance, the world’s largest cryptocurrency
exchange by trading volume, on Friday launched the Proof of Reserves (PoR) for
its Bitcoin (BTC) holdings in its latest show of transparency to reassure
customers of its health following the sudden collapse of top cryptocurrency
exchange FTX.
A PoR is an independent audit conducted by a
third party that seeks to confirm that a digital asset custodian truly holds
the assets it claims it has in reserves to secure customers’ funds. The fall of once-beloved FTX is currently driving renewed interest in PoR in the cryptocurrency community.
As part of our ongoing commitment to transparency, we have provided new updates on #Binance’s Proof of Reserves.
Further updates for $ETH, $USDT, $USDC, #BUSD & #BNB will be coming in the near future.
Stay tuned.
— Binance (@binance) November 25, 2022
Merkle Tree Data
The new update comes two weeks after Binance published the
cold wallet addresses and balances of six of the 600 coins traded on its
platform. Details shared by the top exchange showed that it has
about 475,000 BTC, 4.8 million ETH, 17.6 billion USDT, 21.7 billion BUSD, 601
million USDC and 58 million BNB.
In a statement shared with Finance Magnates on
Friday, Binance noted that it has also made it possible for 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.”
A Merkle Tree is a cryptographic tool that enables the consolidation of large amounts of data into a single hash.
On #Binance, you can use Merkle’s Trees to verify your #Bitcoin is held 1:1, and you can have it verified by a third-party audit agency.
Here’s how it works ⤵️ pic.twitter.com/ZH1DN27jWO
— Binance (@binance) November 25, 2022
“Binance is also working to onboard an
independent third-party auditor to validate the Merkle Tree data,” the
exchange said, adding that it has designed a new PoR site to show that it holds
client funds in full, with reserves.
“So, in simple terms, when a user deposits one
Bitcoin, Binance’s reserves increase by at least one Bitcoin to ensure client
funds are fully backed. People will be able to check the site and see Binance’s
Proof of Reserves, showing Binance’s reserve ratio alongside customer
liabilities,” Binance explained.
‘Massive Undertaking’
In the statement, Changpeng Zhao, Binance’s CEO
and Founder described the new project as “a massive undertaking.” He added that
developing the data required for the majority of assets under the exchange’s custody
requires a few weeks.
“Given recent events, it is understandable that
the community will demand more from crypto exchanges, far more than what is
currently required of traditional financial institutions. That’s why we are
pleased to provide this latest feature for our users to verify their funds,”
Zhao explained.
The CEO assured that the firm was working to get
the next update out as quickly as possible to meet the expectations of the
cryptocurrency community.
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