What does Proof of Reserves mean and...

[Lucius]

Why don’t we just follow Satoshi in the first place?

A small part of people does that, but the majority did not invest in Bitcoin because of what it represents and why it was invented, but they are only interested in profit and do not care too much how it will be achieved. This means that they basically do not understand concepts like blockchain, private and public keys, mempool or fees for sending transactions.

The question arises, how are you going to explain these things to these people if they are not really interested in it? Therefore, they are perfect for what CEX represents, and I don't think much will change there.

[1714659077]

1714659077

[1714659077]

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[Dickiy]

how will it affect anyone's decision to invest in crypto?

Proof of Reserves
Also known as Proof of Funds, Proof-of-reserves is a way to allow customers to monitor the balances of an exchange.¹

This is an important step for the exchanges in order to keep their customers ' and investors' faith alive in crypto. This will make lots of things transparent about many crypto exchanges and will also weed out various bad actors who had been hiding their deeds since long time.

Several Centralize Exchanges are currently and have conducted audits regarding proof of Reserve (PoR).



Binance : https://www.binance.com/en/blog/community/our-commitment-to-transparency-2895840147147652626

Crypto.com : Still in the audit stage, BTC wallet addresses, ETH, ERC20 wallet addresses.

OKX : Still in the audit stage, BTC Address 1, BTC Address 2, BTC Address 3, BTC Address 4,
ERC20 Address 1, ERC20 Address 2, ERC20 Address 3, ERC20 Address 4.

Deriibit : https://insights.deribit.com/exchange-updates/deribit-wallet-holdings/

KuCoin : https://www.kucoin.com/id/blog/transparency-and-trust-a-detailed-list-of-kucoin-s-wallets

Huobi : https://www.huobi.com/support/en-us/detail/24922606430831

Bitfinex : https://github.com/bitfinexcom/pub/blob/main/wallets.txt

ByBit : https://portfolio.nansen.ai/dashboard/bybit

I personally don't know that the data is real or that it has been manipulated because it takes time to check it all. But what is certain is that they (CEX) are trying to fix the public stigma circulating about crypto in droves by demonstrating Fof/PoR.

[DooMAD]

But what is certain is that they (CEX) are trying to fix the public stigma circulating about crypto in droves by demonstrating Fof/PoR.

It's not working.   

Imagine if Politicians started talking about 'Proof of Honesty'.  All that would do is draw attention to how much they lie.  And it's the same with this.  They wouldn't need to be making a big song and dance about this if they could be trusted to begin with.  All they're doing is shining a spotlight on how vulnerable they are.  Hopefully hastening their own demise.

[Gyfts]

The lack of liquidity is a problem, not the only problem.

First of all, there's a lot of ambiguity in where the assets of an exchange exist and whether they're liquid assets or not. I imagine they do this purposefully because most exchanges are great at mismanaging their users' funds. I don't anticipate many enterprises are willing to disclose proof of reserves to any degree of certainty.

Say you had a real time checking mechanism to determine the underlying liquidity an exchange has, that still doesn't matter -- you transfer any funds into an online account and those funds are not yours. They're an assurance that the funds will exist if you choose to withdraw, and that assurance is worthless. You're still liable to hacks or getting locked from your account for whatever arbitrary reason.

Proof of reserves help but they don't solve the issue.

[BigBos]

But what is certain is that they (CEX) are trying to fix the public stigma circulating about crypto in droves by demonstrating Fof/PoR.

It's not working.   

Imagine if Politicians started talking about 'Proof of Honesty'.  All that would do is draw attention to how much they lie.  And it's the same with this.  They wouldn't need to be making a big song and dance about this if they could be trusted to begin with.  All they're doing is shining a spotlight on how vulnerable they are.  Hopefully hastening their own demise.

Yes, they do that to show proof of reserves purpose is to ask users to be able to trust them again, maybe beginners in the crypto world will easily trust them because they have trillions of dollars worth of assets in them without knowing their liquidity, but not us.
CEX is very dangerous, the requirement to use the platform is to do KYC first and fulfill personal data such as using an ID card, passport, and other data.
Personal data will be very dangerous if leaked into the wrong hands, even the consequences can be worse than losing money on the platform, it is also possible that the CEX platform can sell user data for their benefit.

[teosanru]

how will it affect anyone's decision to invest in crypto?

Proof of Reserves
Also known as Proof of Funds, Proof-of-reserves is a way to allow customers to monitor the balances of an exchange.¹

This is an important step for the exchanges in order to keep their customers ' and investors' faith alive in crypto. This will make lots of things transparent about many crypto exchanges and will also weed out various bad actors who had been hiding their deeds since long time.

What is your take on this as an investor in crypto?
Will it add any impact on your decision to get into crypto or stay away from it?

1. Source

Very very important i am really ready to put my money in a project which is about to bring upon this change in the industry. To create a sort of dashboard API to regularly monitor this thing for people. This might be a nightmare for exchanges but after the case of FTX it's more like a necessity for us. I think this will transfer the burden on the exchanges to make sure they keep user's funds not only in appropriate amounts but also in appropriate asset type.

[serjent05]

What is your take on this as an investor in crypto?

Proof of funds means security for the supporters and investors.  Making the funds reserve public ensure the public that the project has enough money to operate.  It is also and indication that the development team is serious in taking the project to new heights since they are honest enough to provide details of project fundings which many corrupt developers hides.

Will it add any impact on your decision to get into crypto or stay away from it?

Definitely, it is good to invest in a platform that has enough fund to continue its development.  After all we cannot really feel the profit in the early development of a project except if its market is pumped which obviously ends up in a dump.

The lack of liquidity is a problem, not the only problem.

First of all, there's a lot of ambiguity in where the assets of an exchange exist and whether they're liquid assets or not. I imagine they do this purposefully because most exchanges are great at mismanaging their users' funds. I don't anticipate many enterprises are willing to disclose proof of reserves to any degree of certainty.

That is why proof of reserve or proof of fund where the address that holds the fund is published.  This way we can see whether a project can continue its development/operation or not.

Say you had a real time checking mechanism to determine the underlying liquidity an exchange has, that still doesn't matter -- you transfer any funds into an online account and those funds are not yours. They're an assurance that the funds will exist if you choose to withdraw, and that assurance is worthless. You're still liable to hacks or getting locked from your account for whatever arbitrary reason.

Proof of reserves help but they don't solve the issue.

Proof of reserve isn't for anti hacking, or whatever issue you are thinking.  Proof of reserve purpose is to show to the public that the company has enough funds to do its service without any problem.

[lixer]

Very very important i am really ready to put my money in a project which is about to bring upon this change in the industry. To create a sort of dashboard API to regularly monitor this thing for people. This might be a nightmare for exchanges but after the case of FTX it's more like a necessity for us. I think this will transfer the burden on the exchanges to make sure they keep user's funds not only in appropriate amounts but also in appropriate asset type.

Why will an exchange think that it is a nightmare for them? They didn't want to be tracked out? If they have bad intentions, yes but for those who are clean, they won't be bothered about it. It is in fact beneficial for both parties because people will gain trust so they won't hesitate to put their money in the exchange and the exchange itself is going to be more in demand. They can now earn more profits because of it.

This proof of reserve thing should have been invented long time ago as early as the mt gox collapsed but they didn't do it, and have waited for more damages to happen before they finally decided to implement it. Oh well it's better late than later/never.

[Lubang Bawah]

The FTX case surprised us and never thought that the top exchanges that had millions of users and daily transaction volumes were more than 1 billion USD per day could go bankrupt, if previously there was an exchange that went bankrupt or scam in my opinion was common, but the FTX case that made a big shock And make us always be vigilant.

[justdimin]

What is your take on this as an investor in crypto?
Will it add any impact on your decision to get into crypto or stay away from it?

I like bitcoin and crypto in general before their so called proof of reserve, and I will like them after. Before FTX, we have seen many disappointments in the past, but we do not just experienced it. Why? Because it is not good to leave fund on an exchange. People should know that they do not have the private key, they do not have the control, it is not their coins on blockchain. With proof of reserve, you still do not have full control over your coins on exchanges, it can be seized, your account can be blocked, you may need money when withdraw option is disabled. What can perfectly solve this is not to trust your coins with anyone, use a noncustodial wallet.

Do not believe that proof of reserve can not be manipulated.

That is said too many times before, not your keys not your money is a common expression in crypto and yet look at the tens of billions of dollars worth of coins all in exchanges. I do not mean just one exchange but even binance alone has over 10+ billion dollars worth of coins in their funds holding for their customers, add in all the other ones and we are talking about maybe 100+ billion dollars worth of wealth all in exchanges because users put their funds in there.

That means you can keep saying not your keys not your money for another decade and yet people will do what they want to do, no idea why they keep doing it, but I do have some money in binance too, so I guess I have some idea why.

[2stout]

Proof of Reserves is meant to show "solvency"; however, it only tells part of the story.  It doesn't tell you if the exchange has made bad bets.  Also, consider the allocation of said reserves- beware of those with too much reserves in their own token.