TL:DR
•Binance launches its Proof of Reserve system today, with Bitcoin at launch.
• The system is designed to show evidence that Binance has the funds to cover all user assets 1:1, with some reserves.
• Users can verify their personal Bitcoin holdings on the trading platform through a provided link or against Binance’s own Merkle Tree — a cryptographic tool that consolidates large amounts of data into a single hash.
• Binance plans to involve third-party auditors to check its PoR system and implement zero-knowledge proof technology (zk-SNARKs), a move aimed at “improving privacy and robustness, and proving the total net balance (USD) of each user is non-negative.”
Cryptocurrency exchange Binance has announced the launch of its new Proof of Reserve (PoR) system today. The system is designed to show evidence that Binance has the funds to cover all user assets 1:1, with some reserves. Here’s everything you need to know about the new system.
In essence, 2/3 of all Bitcoin has not moved from its owner’s wallet in over a year. BTC’s high level of activity is often taken as a sign that people believe in the long-term value of the currency and are holding it for investment purposes rather than day-to-day use. Today, Binance launches its Proof of Reserve system for Bitcoin, which will help to provide greater transparency and confidence in the cryptocurrency. The system will allow users to see how much BTC is being held by the exchange, as well as how much is readily available for trading. In addition, the system will provide an audit trail that can be used to verify that all BTC held by the exchange has been properly accounted for. The launch of the Proof of Reserve system is a positive step for the cryptocurrency industry, and it is hoped that other exchanges will soon follow suit.
What is Proof of Reserve?
Proof of Reserve is a system that shows evidence that Binance has the funds to cover all user assets 1:1, with some reserves. Users can verify their personal Bitcoin holdings on the trading platform through a provided link or against Binance’s own Merkle Tree — a cryptographic tool that consolidates large amounts of data into a single hash.
Binance plans to involve third-party auditors to check its PoR system and implement zero-knowledge proof technology (zk-SNARKs), a move aimed at “improving privacy and robustness, and proving the total net balance (USD) of each user is non-negative.” CEO Changpeng Zhao said, “Proof of Reserve is another step in our mission to build a trusted and reliable cryptocurrency exchange. We are committed to providing our users with a safe and secure trading environment.”
Why is Proof of Reserve Important?
The importance of Proof of Reserve lies in its ability to show that Binance has the funds available to cover all user assets 1:1. This provides increased security for users, as they can be confident that their assets are protected. The implementation of zk-SNARKs technology will also help to improve the privacy and robustness of the system.
How Does Proof of Reserve Work?
Users can verify their personal Bitcoin holdings on the Binance platform through a provided link or against Binance’s own Merkle Tree — a cryptographic tool that consolidates large amounts of data into a single hash. Binance plans to involve third-party auditors to check its PoR system and implement zero-knowledge proof technology (zk-SNARKs), a move aimed at “improving privacy and robustness, and proving the total net balance (USD) of each user is non-negative.” CEO Changpeng Zhao said, “Proof of Reserve is another step in our mission to build a trusted and reliable cryptocurrency exchange. We are committed to providing our users with a safe and secure trading environment.”
The launch of Binance’s new Proof of Reserve system is an important step in increasing the security and trustworthiness of the cryptocurrency exchange. The system provides evidence that Binance has the funds available to cover all user assets 1:1, with some reserves. Additionally, the implementation of zk-SNARKs technology will help improve the privacy and robustness of the system. This is good news for users as it increases confidence in the safety and security of their assets.
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