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Author Topic: Proof Of Solvency Question  (Read 959 times)
neha
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June 26, 2014, 04:18:35 PM
 #1

Hello everyone, we want advice on what is the best way to demonstrate Proof of Solvency for a web based service. We will be storing funds in a cold storage wallet but it will be a shared wallet. We could use some guidance. Thanks.

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June 26, 2014, 04:25:49 PM
 #2

if you store all your funds in a single address, you could sign a message with that adress' private key to prove you own it
is this what you are looking for?
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June 26, 2014, 04:29:44 PM
 #3

Funds will be in hundreds of different addresses. To store it in a single address would require moving funds continuously to one address. We were looking for a better solution than this so that it can be tracked by customers 24/7 instead of being tracked once in a while. Would really appreciate some help in this.

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June 26, 2014, 07:49:08 PM
 #4

Try a rotating multi-sig scheme with the sender daemon. Sign 1 satoshi transactions with a "quote of the day" after posting said quote on a public time stamped forum





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June 26, 2014, 07:50:58 PM
 #5

Dust limit will ensure these transactions won't confirm - you could also rotate the same scheme using paper wallets





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▬▬▬ANN▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬WP▬▬▬
.CHALLENGES ON SMART CONTRACTS.
▬▬▬▬▬▬▬▬ICO STARTS 7th DEC, 2017▬▬▬▬▬▬▬▬







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neha
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June 27, 2014, 03:49:31 AM
 #6

Is it possible that we sign each and every address with our signature and then post the list on our site so that it can be verified any time if any one wants to go and check each and every address. We will put a cumulative balance on the page also. Is there anything wrong in this approach?

Ofcourse there will be quarterly audits by the Chartered Accountants and the report will be released. Is this enough?

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June 27, 2014, 03:54:32 AM
 #7

Is it possible that we sign each and every address with our signature and then post the list on our site so that it can be verified any time if any one wants to go and check each and every address. We will put a cumulative balance on the page also. Is there anything wrong in this approach?

Ofcourse there will be quarterly audits by the Chartered Accountants and the report will be released. Is this enough?

From the perspective that its equivalent to how fiat-equity, publicly-traded companies run their audit compliance, yes, it would be technically sufficient.  However, due to the vastly more real-time nature of bitcoin vs. ACH-moderated fiat accounts, it may not be enough for the purposes of guaranteeing proof of solvency within the bitcoin community...





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▬▬▬ANN▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬WP▬▬▬
.CHALLENGES ON SMART CONTRACTS.
▬▬▬▬▬▬▬▬ICO STARTS 7th DEC, 2017▬▬▬▬▬▬▬▬







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June 27, 2014, 04:04:46 AM
 #8

What if we post a real time list of customers accounts(notified by a different number) and the customers can check if the amount associated with their account is being displayed correctly or not and then match the totals of the held funds with the total amount of bitcoins held. Ofcourse the summary will be available in a small table format where as the customer list and address will be in two different pages. This will be 100% realtime.

This will be in addition to the external audit. Is this sufficient?

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June 27, 2014, 06:02:01 AM
 #9

If you need help with proof of solvency I can help you, pm me.

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jjdub7
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June 28, 2014, 08:35:49 AM
 #10

What if we post a real time list of customers accounts(notified by a different number) and the customers can check if the amount associated with their account is being displayed correctly or not and then match the totals of the held funds with the total amount of bitcoins held. Ofcourse the summary will be available in a small table format where as the customer list and address will be in two different pages. This will be 100% realtime.

This will be in addition to the external audit. Is this sufficient?

You won't be able to minimize fees across your wallet base though with this plan, costing you (meaning your users, since you'd have to pass that cost onto them, meaning theoretically fewer users) a hell of a lot more over time.  Normally, you'd write a script to pull from the addresses with the highest (or sufficient) balance to minimize fees in order to be able to maintain a constant or low variable fee for withdrawals - the same way that Coinbase allocates different buy/sell prices for buys/sells with more sig figs.  This is why on exchanges such as Havelock, if you check your deposit address, it won't show your actual account balance, which is maintained by the server's ledger rather than the blockchain (off-chain).

The 1-satoshi+signatures would only cost you a hold (not a spend) on X number of satoshis, where X is whatever number of addresses your model would validate per day.  With that type of model, you could probably validate each address once a week, so if you had 70,000 customer addresses total, you'd only have to put a hold on 10,000 satoshi per day.

Keep in mind that in order to use the 1 satoshi solvency method, you'd have to create a wallet backup before executing an iteration of the verification run to restore the broadcast satoshis back to your wallet after the 1-day period of viewing has passed (otherwise they'd be effectively lost or at the very best, extremely hard to recover).  Also - your auditor team could write a code to monitor the BTC flowing in and out of your company's set of customer addresses to provide realtime aggregate cashflows for your financials - this would be the mechanism that would enable users to ensure they'd be able to withdraw on any given day.





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June 29, 2014, 02:57:01 PM
 #11

https://iwilcox.me.uk/2014/proving-bitcoin-reserves

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June 30, 2014, 03:30:12 AM
 #12

Thanks. This helps. We were thinking of using something similar to the Merkle approach with signing each and every address for verification.

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