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Binance Launches Reserve Verification System for BTC Holdings • CableFree TV

Cryptocurrency exchange company Binance released new site this explains its reserve confirmation system. The company starts with BTC reserves. Right now, Binance has a reserve ratio of 101%. This means that the company has enough bitcoins to cover the balances of all users.

This step takes place a couple of weeks after collapse of FTX, another popular crypto exchange. In the case of FTX, the company faced a liquidity crisis. It stopped processing withdrawals because it could not meet the demand from investors and end users.

Since then, crypto companies — and crypto exchanges in particular — have been trying to be more transparent about user funds. This means sharing more information about hot and cold wallets. But there is still a lot of work ahead before you can fully trust crypto exchanges and how they manage funds.

A few weeks ago, Binance started with an exchange wallet addresses with billions of dollars of crypto assets. With this move, the company has proven that it does indeed have a lot of assets and can process a ton of withdrawals. But the company did not specify whether they are user assets, Binance’s own balance, or a combination of the two.

With today’s new reserve confirmation site, Binance clarified this point by stating that the BTC wallets included in the reserve confirmation system do not include Binance’s own funds.

“Importantly, this does not include Binance corporate assets, which are held in a completely separate ledger,” the company said in a statement. You’ll have to take Binance’s word for it, as you can’t verify it with the blockchain explorer.

Binance starts with BTC holdings. Summarizing the amounts in each Binance wallet is very simple. When it comes to user assets, the company uses a Merkle tree to include all individual user accounts and create a cryptographic seal.

As of November 22 at 23:59 UTC, Binance users collectively held 575742.4228 BTC – about $9.5 billion at today’s exchange rate. And Binance had enough bitcoins in their own wallets to cover 101% of those funds. In other words, if everyone withdraws their BTC at the same time, Binance will have enough BTC to process all withdrawals.

Thanks to the Merkle tree, individual users can use the root hash to check if their accounts are included in a snapshot of user balances. Binance says it includes user balances across various products – Spot, Funding, Margin, Futures, Earn, and Options Wallet. The company also provides a short Python script so you can test it out yourself.

“Given recent events, it is understandable that the community will demand more from crypto exchanges than what is currently required from traditional financial institutions. That’s why we’re excited to bring this latest feature to our users to verify their funds,” Binance founder and CEO Changpeng “CZ” Zhao said in a statement. “Because the Binance user community is exponentially larger than that of the next largest exchange, this is a massive undertaking and it will take several weeks to get data for most of our holdings. We are working to release the next update as soon as possible to meet the community’s expectations.”

The company is already planning to release similar reserve confirmation information for ETH, USDT, USDC, BUSD, and BNB in ​​the future. Binance offers hundreds of different crypto assets, so let’s hope they can also cover withdrawals for lesser-known cryptocurrencies.

Similarly, the company should work with independent financial and accounting firms so that you don’t have to trust the company blindly. There is still a long way to go, but at least today’s new reserve confirmation system is a step in the right direction.

By Peter Kavinsky

Peter Kavinsky is the Executive Editor at cablefreetv.org