By George Ward
The proof-of-reserves (PoR) report of Binance is a system that allows users to verify the number of crypto assets held by the exchange. This system is essential to any cryptocurrency exchange, as it assures customers and investors that their holdings are safe and secure.
Adding these tokens is a significant step forward for Binance, as it shows its commitment to providing a secure and reliable platform for its users. With 24 assets now accounted for in the PoR, customers, and investors can be confident that their funds are safe and secure.
$63 Billion and Growing
MASK, WRX, ENJ, GRT, CRV, CHR, 1INCH, HFT, CVP, DOGE, and SSV are the tokens incorporated in the report. This brings the total number of assets in the PoR system of Binance to 24, having an actual worth of nearly $64B.
PoR has become an essential tool for cryptocurrency exchanges that want to prove their solvency and transparency. Merkle trees form the basis of Binance’s PoR system, which organizes the data stored on the blockchain.
The system maintains a one-to-one ratio between customers’ assets and the equivalent reserve held by Binance for each token a user owns. Customers can verify the safety of their funds through this method, which assures them that their assets are secure.
Implementing Binance’s Proof-of-Reputation (PoR) system by other cryptocurrency exchanges is a consequence of the sudden shutdown of FTX, highlighting the necessity for greater transparency within the cryptocurrency industry.
Potential Drawbacks
Despite the popularity of the PoR technique, specialists have cautioned that there are several drawbacks. One involves the need for insight regarding collateralization, leverage, or the proof-of-liabilities associated with these concepts.
To gain this information, financial documents that provide a complete picture of the company’s financial position must accompany the PoR. In February 2023, Binance launched an upgrade to its Proof-of-Reserve (PoR) system that incorporates zk-SNARKs.
This is a type of zero-knowledge proof, which allows for the verification of data without revealing the data itself. As such, Binance states that this will increase user data privacy and security during the verification process.
Binance’s latest move reaffirms its commitment to customer security, demonstrating its dedication to providing a secure and dependable experience.