Binance Releases 12th Proof of Reserve Report – Is It Enough to … – milkroad.com
Cryptocurrency exchange Binance has released its twelfth proof of reserve report, providing transparency into its reserves during a period of market instability. The latest report, with a snapshot date of November 1st, 2023, was calculated and verified by independent Chinese journalist Colin Wu.
The proof of reserve report aims to reassure users that Binance has sufficient cryptocurrency reserves to cover all customer balances and liabilities. This has become increasingly important amidst recent volatility and uncertainty in crypto markets that have led to liquidity issues at some exchanges.
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Binance utilizes Merkle Tree cryptography to generate these reports. All customer net balances are consolidated into a Merkle Root, which acts as a cryptographic seal summarizing account balances on the snapshot date. An independent auditor then verifies that the balances match the exchange’s liabilities.
For now, the transparency reports offer traders peered insights into the exchange’s inner financial workings during turbulent times. The community had lost trust in centralized exchanges following the collapse of FTX in 2022. Reports like proof-of-reserves are a light at the end of the tunnel to ensure that there are enough reserves to back the customer balances.
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