Binance Introduces Proof-Of-Reserves System, Starting With Bitcoin
In order to demonstrate that the exchange is stable and financially sound, Binance has made its proof-of-reserves method available, beginning with bitcoin.
This occurs only a few weeks after a competing exchange, FTX, shut down, allegedly exchanging user cash for other, less liquid tokens, causing a liquidity crisis in the process. The objective of Binance is to demonstrate that it holds the assets of its users in the same tokens that they have placed.
Binance has given a snapshot of account balances and the exchange’s bitcoin reserves for the cryptocurrency bitcoin. It asserts to have 582,485 bitcoin in reserves, yet its users’ net balance is just 575,742 bitcoin, leaving it with a 6,743 bitcoin profit. Users of Binance could also access a link to check the status of their own bitcoin on the exchange.
In the next weeks, according to Binance, more coins and blockchains will be added. Additionally, it plans to employ zero-knowledge proof technology to give cryptographic evidence of its claims while preserving user privacy, as well as third-party auditors to evaluate the proof-of-reserves mechanism.
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