10 Dec 2022
Bybit is the most recent cryptocurrency exchange to announce proof-of-reserves
A proof-of-reserves (PoR) page has been made available by the Singapore-based cryptocurrency trading platform Bybit to reassure its clients that it is a reliable business.
The proof-of-reserves shows the cryptocurrency exchange holds the assets that users have entrusted to it in a 1:1 ratio.
The exchange promised in a Dec. 10 announcement on its website that it would take every precaution to protect its customers' assets and provide evidence of this on a dedicated “proof-of-reserves” page.
Customers can check their account balances and the reserve ratio of the exchange on this page, as stated by the company.
The company is working on a proof-of-reserve feature that will verify wallet ownership without requiring users to enter private keys.
The reserve ratio for every cryptocurrency is greater than 100%.
According to the results of a proof-of-work audit, Bybit had 101% Bitcoin (BTC) and Ethereum (ETH) reserves and 102% US Dollar (USD) and US Coin (USDC).
Bybit had 20,710 BTC, worth approximately $355.7M at the time of the audit's publication. Bybit's 156,064 ETH were worth approximately $199,000,000.
As a necessary step toward establishing proof of reserves, the cryptocurrency exchange disclosed the locations of its largest cryptocurrency wallets on November 16.
The platform's claimed number of digital assets can be verified by checking their “proof-of-reserves.”
It's a required inspection method for ensuring that tangible assets are backing crypto in a decentralized setting, and it's an auditing procedure that addresses concerns about the transparency of assets held on crypto exchanges.
The failure of FTX sparked a movement toward PoR.
One of the largest cryptocurrency exchanges, FTX, recently collapsed, sending shockwaves through the industry and prompting many to reevaluate their commitment to cryptocurrency.
A leak of FTX's financials showed that most of the exchange's reserves and funds were denominated in FTT, the company's native token.
The problem is that FTX and Alameda Research just printed FTT, which means the exchange's value is probably inflated and gives a false impression that the trading platform is doing better than it actually is.
The incident and its aftermath damaged many businesses and individuals, highlighting the need for exchanges and custodial institutions to confirm their liability.
Cryptocurrency exchanges like Crypto.com and Binance have made or will make their proof-of-reserves audits public to ease customers' fears.
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