Binance Is Taking Vitalik Buterin’s ‘Idea’ For Proof-of-Reserves System

Sahana Kiran
Source – Unsplash

The cryptocurrency market has been increasing emphasis on proof-of-reserves [PoR] to attain better transparency. Over the past few months, an array of exchanges have come forward with their PoR reports. Binance, however, faced issues after its accounting firm Mazars Group decided to veer away from the crypto-verse. Now, the exchange was back making headlines after it employed zk-SNARKs’ zero-knowledge proof system in its PoR verification system.

Binance moved forward to stress how the funds held on it are backed 1:1. The exchange currently supports 13 different assets in its reserves.

The exchange added this feature in response to investors’ rising worries about the security of their money on the exchange. A PoR method purely based on Merkle Tree, a cryptographic data structure that may be employed for verification, was previously made available by Binance. However, the CZ-led firm soon figured that this wasn’t enough for its customers’ privacy. Therefore, the latest addition was implemented.

zk-SNARK allows the prover which is Binance to show the verifier, the user, that the prover properly performed specified computations. The prover will do so with certain inputs under specific constraints without disclosing the inputs. Although the calculation may take some time, the underlying mathematical method can provide a speedy and secure assessment of the evidence by the verifier.

Was Binance working on this the whole time?

Earlier this week, Leon Foong, Binance’s Asia-Pacific Head revealed that the firm was looking to roll out an expanded PoR report. Foong said,

“It’ll take a longer time.”

Changpeng Zhao, the CEO of the exchange described the exchange’s latest move and stated,

“More privacy and security, this is an important step forward in PoR technology. Anyone in the industry can take advantage of our open-source PoR system so that we can provide all users with the assurance they need to feel SAFU.”