Crypto exchanges have realized they must introduce the Merkle tree proof of funds. The discussion accelerated after the FTX collapse. However, other failures in the industry have also contributed to highlighting the need for this in the crypto industry. Some of these failures are Celsius Network, BlockFi, Voyager, Three Arrows Capital, Alleged and last FTX. […] The post Crypto Exchanges with Merkle Tree Proof of Funds and Reserves appeared first on Cryptocointrade.

Crypto Exchanges with Merkle Tree Proof of Funds and Reserves

Crypto exchanges have realized they must introduce the Merkle tree proof of funds.

The discussion accelerated after the FTX collapse. However, other failures in the industry have also contributed to highlighting the need for this in the crypto industry. Some of these failures are Celsius Network, BlockFi, Voyager, Three Arrows Capital, Alleged and last FTX.

Crypto Exchanges with Merkle Tree Proof of funds

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  • Company
  • Merkle Tree
  • Signup
  • Proof of reserves
Kraken
  • Planning Late 2022
Binance
  • Planning
KuCoin
  • Planning
ByBit
  • Planning
Gate.io

What is a Merkle Tree?

The Merkle tree from Ralph C Merkles’ publication in 1974. See the link below.

A Merkle tree allows two parties to agree on a shared secret by exchanging messages, even if they have no secrets in common beforehand.

The first-ever mention of such a tree was published in Protocols for Public Key Cryptosystems 1978 by  Ralph C Merkle. 

What is Proof of reserves?

No formally accepted rules or procedures define crypto proof of reserves audit.

Still, in general, a Proof of Reserves (PoR) is an independent audit conducted by a third party.

The primary mission of the 3rd party in this contest is to ensure that a custodian holds the assets it claims on behalf of its clients.

This auditor takes an anonymized snapshot of all balances held and aggregates them into a Merkle tree — a privacy-friendly data structure that encapsulates all client balances.

From there, the auditor obtains a Merkle root: a cryptographic fingerprint that uniquely identifies the combination of these balances when the snapshot was created.

Kraken - First Crypto Exchange with Proof of Reserves

Kraken was the first significant crypto exchange to implement proof-of-reserves in August 2022.

This happened before the crypto community screamed about it after the FTX crash in early November 2022. It’s essential with such inventors like Kraken in the crypto space working proactively to avoid such significant drops in trustworthiness that the FTX crashed caused.

How to verify that your account was audited on Kraken?

Step-by-step guide on how to verify your funds on Kraken.

  1. Login to your Kraken account
  2. Click on your name in the upper right corner and choose “Audits.” Here, you will find the historical proof of reserves conducted by Kraken.
  3. Select the audit date you want to verify. The Record ID enables you to confirm that your account balance was included via the third-party auditor.

How to verify your record with the auditor?

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Go to Kraken

Crypto Proof of Reserves Roadmap

Many of the top Bitcoin and altcoin trading exchanges are now making statements about implementing proof-of-reserves and even standardizing this in the crypto industry. 

Binance - Proof of Reserves

Binance has already started working on going fully transparent with its holdings.

Binance is planning to introduce a Merkle tree proof of reserves and expects to take at least a month.

In the meantime, CZ is publishing all the public addresses held by Binance.

Kucoin - Proof of Reserves

At the moment (November 2022), Prof-of-reserves is at the top of all Crypto exchange CEO priorities. They are tweeting about this topic, publishing publishes addresses, and communicating plans to introduce Merkle tree proof-of-reserves.

Bybit

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Gate.io

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Crypto Proof of Reserves - Pros and Cons

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The post Crypto Exchanges with Merkle Tree Proof of Funds and Reserves appeared first on Cryptocointrade.