Binance announced on Friday that it is establishing a new proof of reserves (PoR) website to indicate that it holds client assets in full as a digital currency keeper.
Binance has Bitcoin reserves to start. Currently, the company’s BTC reserve ratio is 101%. This indicates that the cryptocurrency has sufficient supply to cover all user balances.
Users will be able to examine the website for greater openness regarding the company’s proof of reserves and the exchange’s reserve ratio in relation to client liabilities.
In the coming weeks, Binance, the world’s largest crypto exchange by trading volume, will introduce additional tokens and networks.
“Given recent events, it is logical that the community will need significantly more from cryptocurrency exchanges than is now required of traditional financial institutions,” TechCrunch cited Changpeng ‘CZ’ Zhao, founder and CEO of Binance, as saying in a statement.
Binance CEO Changpeng Zhao. Image: CryptoSlate
Need For Transparency: It All Started After FTX Crisis
The failure of FTX has prompted other cryptocurrency companies to promise greater transparency in an effort to boost trust. An estimated 1 million creditors have suffered damages of billions of dollars as a result of the collapse.
Binance and a number of other competitors have pushed proof of reserves as a solution. CZ stated that they are glad to offer this latest tool for users to verify their funds.
This move comes a few weeks after the collapse of the FTX cryptocurrency exchange. In the case of FTX, the company faced a severe liquidity gap. The exchange led by Sam Bankman-Fried ceased processing withdrawals because it could no longer meet investor and end-user demand.
Proof Of Reserves: A Quick Definition
A third party undertakes a proof of reserves, which aims to verify that the claimed holdings are in fact present. It could reveal where a client’s assets are and where they have been.
However, while proof of reserves could demonstrate to clients that their funds are still in their accounts and have not been lent out, this does not tell the whole story.
The issue, according to financial specialists, is that consumers are frequently unaware of important hazards, as proof of reserves is sometimes an inaccurate picture.
Binance said in a statement that users who wish to independently check their funds can copy the source code into a Python application and cross-reference it.
Crypto total market cap at $797 billion on the daily chart | Featured image from Bitcoin.com, Chart: TradingView.com