Bybit becomes latest crypto exchange to announce proof-of-reserves

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Security
Bybit becomes latest crypto exchange to announce proof-of-reserves

A Singapore-based crypto trading platform Bybit has announced it has made available a proof-of-reserves (PoR) page to reassure its customers that it’s a trustworthy company. The proof-of-reserves is validation that the crypto exchange holds assets entrusted to it by users in a 1:1 ratio.

Customers can verify their balances

In a Dec. 10 announcement on its official website, the exchange stated it would spare no effort to keep customers’ assets safe and secure and would show this through the proof-of-reserves page.

According to the company, customers can use the page to verify the balance of their assets held on the platform and the exchange’s reserve ratio. The company also plans to make it possible to verify ownership of wallets via proof-of-reserve, although this feature is still in the works.

All crypto assets have a reserve ratio of more than 100%

Bybit’s proof-of-work audit revealed that its Bitcoin (BTC) and Ethereum (ETH) reserve ratios stood at 101%, while its other significant holdings, USDT and USDC, were at 102 and 103%, respectively.

The audit also revealed that Bybit had a BTC balance of 20,710, valued at about $355.7 million at press time. Bybit also had 156,064 ETH with a market value of $199 million.

On Nov. 16, the cryptocurrency exchange publicized the addresses of its largest crypto wallets as a precondition for creating proof of reserves.

Proof-of-reserves confirms that the platform has the number of digital assets it claims to have. It is an auditing procedure that addresses concerns about the transparency of assets held on crypto exchanges and a critical inspection technique for ensuring that real assets back crypto in a decentralized environment.

FTX failure sparked the PoR trend

The recent failure of FTX, one of the world’s largest crypto exchanges, shook the industry and forced many people to rethink their investments in cryptocurrencies.

A leaked FTX balance sheet revealed that most of its funds and reserves were made up of its native token, FTT. The problem is that FTX and Alameda Research essentially printed FTT directly, meaning the exchange’s value was likely inflated, which led many to believe the trading platform was performing better than it was.

The incident and the fallout that damaged multiple companies and individuals demonstrated the importance of verifying liabilities for exchanges and custodial institutions. To calm customers’ frazzled nerves, crypto exchanges worldwide, including Crypto.com and Binance, have made their proof-of-reserves audits public or plan to do so.

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Wayne Jones

Wayne is an all-rounded cryptocurrency writer who has written for several publications in the fintech industry. Having graduated from the University of Essex Colchester, he developed a passion for blockchain technology and has been curious about how the blockchain can modify the traditional financial industry.