Binance, a cryptocurrency exchange, has unveiled a new site that details its proof-of-reserves architecture. Beginning with reserves in BTC, the business. Binance currently has a 101% reserve ratio. This indicates that the business has enough bitcoins on hand to cover every user’s balance.
This action was taken a few weeks after another well-known cryptocurrency exchange, FTX, went bankrupt. In the case of FTX, the business experienced a liquidity crisis. It ceased processing withdrawals because it was unable to satisfy end users’ and investors’ requirements.
Since then, cryptocurrency businesses, and exchanges in particular, have worked to increase user fund transparency. More knowledge on hot and cold wallets has to be shared. But before you can fully trust cryptocurrency exchanges and how they handle assets, there is still a lot of work to be done.
Binance’s initial assets are in bitcoin. It’s simple to add up the balances in each wallet owned by Binance. The business creates a cryptographic seal for all individual user accounts and includes them in a Merkle tree when it comes to user assets.
Users of Binance possessed 575742.4228 BTC as of November 22 at 23:59 UTC, which is around $9.5 billion at the current exchange rate. And Binance has 101% of these funds in bitcoins in its own wallets. In other words, Binance would have enough BTC to handle all withdrawals if everyone withdrew their BTC at once.
Individual users can utilize the root hash to determine whether their accounts are included in the snapshot of user balances thanks to the Merkle tree. According to Binance, user balances are included for a variety of products, including the Spot, Funding, Margin, Futures, Earn, and Options Wallet. The business also provides a little Python script for you to check on your own.
