In the wake of increasing crypto exchange collapses, Proof of Reserves (PoR) has emerged as a critical transparency tool. But what is it, and why does it matter?
PoR is a method used by cryptocurrency exchanges to publicly verify that they hold enough assets to back their users' balances. Typically, a third-party auditor performs a cryptographic check, ensuring that the assets claimed by the platform truly exist on-chain — and are not just numbers on a screen.
This system boosts user trust, reduces the risk of fraud, and protects against insolvency. After the FTX disaster, exchanges like Binance started sharing their PoR more frequently. It’s not a perfect system yet, but it’s a solid step toward accountability.
As a user, you should always check whether your exchange offers PoR. It’s your money, your right to transparency.
In the future, we may see blockchain-native solutions replacing even third-party audits. Until then, PoR remains one of the best tools we have to demand honesty in crypto.
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