Once again this year, we would like to sweeten the Advent season for our readers with an Advent calendar. In a slightly different form, each door contains a “knowledge bomb”, which will be supplemented with an extraordinary special prize on Christmas Day.
Behind the eighteenth door is the term “proof-of-reserves”. To enter the giveaway on the 24th, simply participate in the polls and like the respective Twitter posts.
Proof-of-Reserves
The trust of market participants in crypto exchanges and other central crypto service providers has understandably taken a severe hit following the FTX insolvency. Thus, trading venues feel compelled to restore the lost trust through so-called “Proof-of-Reserves”. Proof-of-reserves (PoR) is a transparent auditing practice for cryptocurrency companies that provides an unbiased report on their reserves.
Third-party auditors access cryptographic signatures representing the total balance of customer funds and ensure that the custodian of those funds has equal (or greater) reserves to cover all potential customer withdrawals. While the blockchain-verified record of assets is a start to improved transparency, it represents insufficient transparency due to the absence of liabilities to customers.
