The crypto industry received a shock in 2022 when it was revealed that FTX had gone bankrupt. This led to skepticism about whether exchanges genuinely hold the assets that customers deposited on them or if they mismanage them as with the case of the collapsed exchange.
Going forward it became clear that Proof of Reserves (PoR) would be helpful in regaining customers’ trust. Proof of Reserves simply refers to the independent audit conducted by smart contract audit companies on cryptocurrency exchanges to verify that they truly hold the assets that users have entrusted to them.
PoR has come to depict transparency and security in exchanges, as well as a dedication to fostering unwavering trust in their platforms. As of Nov 3, 2023, Bitget has gone one step further publishing a remarkable reserve ratio of 199%, as seen on Coinmarketcap. This actually means that an extra dollar is allocated on the platform for each dollar a user deposits to guarantee the complete solvency and security of their assets.
Sadly, insecurity is still one of the major limitations facing the crypto industry. The leading exchanges however are taking a number of steps to close the gaps and win back users’ confidence with PoR one of those measures.
Having witnessed the regrettable FTX shutdown, are you most likely opting for exchanges with verifiable PoR over exchanges that are devoid of PoR?
This is quite insightful, and has driven some curiosity in me and I had to check which exchanges has published their proof of reserve, turns out not many have done this in reality and the leading exchanges seems to take it very seriously, I guess this is to prove the effectiveness of their financial control even coinmarketcap recently announced updated proof of reserve for Bitget which totals $1.54 billion. I definitely will upt in for exchanges that audit their proof of reserve.
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The things i consider before choosing an exchange are; PoR, other users reviews on the exchange, security measures, regulatory compliance, and overall reputation of the exchange in the cryptocurrency space. I believe PoR goes along to reassure users of the exchanges' transparency and trust
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