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Binance Is Showing How It Won’t Go The Way of FTX – What Steps Has It Taken?

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Binance, the world’s largest cryptocurrency exchange by trading volume, has announced the release of its proof-of-reserves (PoR) system, which it describes as the next step in promoting ecosystem trust among investors.

According to the official statement, the PoR system will begin with Bitcoin (BTC), with the addition of other currencies and networks coming in the coming weeks. Binance currently has a reserve ratio of 101%. The company has enough bitcoins to cover each user’s balance.

This action was taken just a few weeks after FTX, a well-known cryptocurrency exchange, went down. The corporation FTX experienced a liquidity problem, which harmed the entire crypto market. However, due to an inability to meet the demand from investors and customers, it ceased processing withdrawals.

Cryptocurrency companies and exchanges have been working hard to increase user fund transparency in this regard. To address this issue, a greater exchange of knowledge about hot and cold wallets is required. However, much work remains to be done before we can fully trust cryptocurrency exchanges and how they handle assets.

Binance Exchanging Wallet Addresses

Binance recently began exchanging wallet addresses for crypto assets worth billions of dollars. This action demonstrated that the company does have a substantial amount of assets and is capable of handling a substantial volume of withdrawals. However, the company did not specify whether the assets come from users’ balance sheets, Binance’s balance sheet, or a combination of the two.

With the launch of the new proof-of-reserves site today, Binance confirmed this by stating that the BTC wallets contained in the proof-of-reserves system do not include Binance’s assets. It is important to note that Binance’s corporate holdings are kept on a completely separate ledger, according to the company.

Binance is beginning with BTC holdings. The balances in each wallet maintained by Binance are simple to calculate. When it comes to user assets, the company creates a cryptographic seal for each unique user account and includes all of them in a Merkle tree.

Binance Users Keep Approx $9.5 Billion in BTC

The leading crypto exchange, Binance, reported that users had a total of 575742.4228 BTC as of November 22, which is approximately $9.5 billion at the current exchange rate. Binance also has bitcoins covering 101% of this money in its wallets. In other words, if everyone withdraws their bitcoins simultaneously, Binance will have enough bitcoin to cover all withdrawals.

Individual users can use the root hash to see if their accounts are included in the Merkle tree’s snapshot of user balances. User balances are included for a variety of products, including the Spot, Funding, Margin, Futures, Earn, and Options Wallet, according to Binance.

CZ’ said in a statement:

Given recent events, it is understandable that the community will demand more from crypto exchanges, far more than what is currently required of traditional financial institutions. That’s why we’re pleased to provide this latest feature for our users to verify their funds,” Binance founder and CEO Changpeng Zhao.

As Binance’s user community is exponentially larger than the next largest exchange, this is a massive undertaking. It will take a few weeks to develop the data for most of our assets in custody. We are working on getting the next update out as quickly as possible to meet the community’s expectations.

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