What is Proof of Reserves?

Proof of Reserves (PoR) is a verification method used by cryptocurrency platforms (such as exchanges and custodians) to demonstrate that they have sufficient reserves to cover customer assets. The goal of PoR is to improve transparency and build user trust in platforms.

Key aspects of Proof of Reserves:

🔵 Asset Verification
— ​​Platforms publish data showing that the assets in their reserves are equal to or greater than their obligations to customers.
— This is demonstrated by cryptographic proofs, such as the Merkle Tree.

🔵 Third-party Auditing
— To build trust, the auditing process is often performed by independent auditors who verify and confirm the platform’s data.

🔵 Merkle Tree
— A Merkle Tree is a cryptographic structure that allows users to verify that their balance is included in the platform’s total assets, without disclosing other users’ data.

🔵 Openness and Transparency
— Using PoR allows platforms to show that they are not taking …

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