After the market chaos that ensued earlier this week, Binance, and many other firms have pledged to soon start a Proof-of-Reserves audit system to allow verification of its digital asset holdings.
CEO of crypto exchange Binance, Changpeng “CZ” Zhao, on Tuesday tweeted that the exchange pledges to implement a Proof-of-Reserve mechanism to provide “full transparency” using Merkle Trees. Merkle Trees, also known as “binary hash trees,” is a data structure that is used to encode blockchain data more securely and efficiently. Using these data structures allows exchanges to store each user account’s hash value of assets in the “leaf nodes” of the Merkle Tree and thereby verify all users’ holdings by a third party.
CZ vowed to implement Proof-of-Reserves after Binance agreed to buy rival crypto exchange FTX on Tuesday. FTX was rumored to be on the brink of financial collapse despite CEO Sam Bankman-Fried dismissing any such claims. Since CZ made the announcement, many oth
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