Proof of Reserves (PoR) is essentially a public financial statement that shows how much cryptocurrency an exchange holds to back user balances. It’s a way for exchanges to prove that they actually have enough assets in their treasury to cover withdrawals at any time.
The importance of PoR cannot be overstated. In the past, some exchanges misrepresented their asset holdings, leading to insolvency and loss of user funds. PoR protects against such risks by providing users with the ability to verify reserves independently.
The need for a tool like proof of reserves on-chain auditing tool has become more of a necessity than innovation. In this article we will take you through what proof of reserves means and how it works in real time on Bitunix.
What is Proof of Reserves (POR)?
In simple terms, Proof of Reserves is a public demonstration that an exchange actually holds the assets it claims to have. It’s a way to verify that if you deposited Bitcoin (BTC), Ethereum (ETH), or Tether (USDT) on the platform, the exchange has those funds available to pay you back whenever you want to withdraw.
Proof of Reserves is crucial because, in the past, some exchanges claimed to have user funds when they didn’t. This sent shockwaves to the entire crypto industry, making it difficult for users and exchanges to rebuild the trust. To ensure that we uphold our transparency virtue, we built the proof of reserves portal that allows users to check their on-chain balances in real time.
How Does Bitunix Proof of Reserves Work?
The core principle behind Bitunix PoR is simple. If you have deposited 1 Bitcoin then only 1 BTC will reflect on the ledger. This is the same for all major cryptocurrencies. We not only meet the minimum balance amount but often have more liquidity in the treasury.
While many believe that these numbers can be false or tampered with, we went ahead and built the POR system on blockchain. This means that anyone can verify the data on the blockchain, making it trustless and reliable.
At Bitunix, we took the non-traditional approach and opted to share proof of reserves using a cryptographic method called merkle tree. It is a data structure that securely combines and summarizes all user balances on the platform. Let’s break down what a merkle tree looks like.
Imagine a tree whose leaves are individual user balances. The branches combine those balances into groups and the root is a single, secure fingerprint (called the Merkle Root Hash) representing all balances.
What is the Merkle Root Hash?
The Merkle Root Hash is a cryptographic code that proves all user balances are included in the exchange’s reserves without revealing individual data. It’s like having a secure receipt that confirms your funds are part of Bitunix’s fully-backed reserves.
How to Verify Your Own Funds on Bitunix?
One of the most important aspects of our Proof of Reserves system is that users can verify their holdings at any time. Here is how you can check your own reserves on the Bitunix platform:
Step 1
Access the Proof of Reserves Page: To check the POR, visit the home page of Bitunix and scroll to the bottom. Next, click on Proof of Reserves.
Step 2
View Your Personal Audit: On the Proof of Reserves page, select “My Audit” to access your account’s reserve details.
Step 3
You will see your recent audit results, including a unique cryptographic code called the Merkle Leaf.
Verify Your Holdings Using the Merkle Leaf: To verify, simply copy the merkle leaf and return to the Reserves dashboard and past the leaf data in the verifier.
The system will confirm whether your assets are included in the total reserves, providing cryptographic proof that your funds are fully backed. (see image below)
Watch our tutorial on How to Verify Your Proof of Reserves on Bitunix?
Why Proof of Reserves Matters for Bitunix Users?
Our commitment to Proof of Reserves offers significant benefits to our users:
- Trust and Transparency: With publicly available reserve data and user-verifiable audits, we ensure complete transparency about our asset holdings.
- Guaranteed Security of Funds: With our 1:1 asset backing and over-reserving policy, users can trust that their deposits are safe and immediately accessible.
- Personalized Verification of Reserves: Our Merkle Tree-based system allows each user to independently verify their holdings, reinforcing trust and transparency.
- Protection from Liquidity Crises: With over 100% reserves and periodic third-party audits, we mitigate the risk of insolvency and ensure users can always withdraw their funds.
Why Do We Implement Proof of Reserves at Bitunix?
The cryptocurrency industry has seen cases where exchanges collapsed due to poor asset management and lack of transparency. These incidents often left users without access to their funds. At Bitunix, we believe that such situations are entirely preventable through regular audits, public reserve reports, and user-verifiable Proof of Reserves.
Our mission is to provide a trading environment where users feel confident that their assets are safe. By implementing a transparent and verifiable PoR system, we empower users to take control of their trust and security.
Frequently Asked Questions (FAQs) About Bitunix Proof of Reserves
Q: How often are Bitunix Proof of Reserves audited?
A: We conduct regular audits, and users can check their reserves using the POR my audit tool.
Q: Can users verify their holdings without advanced technical skills?
A: Yes. Our PoR dashboard is user-friendly, and verifying your assets using the Merkle Leaf is simple and straightforward.
Q: Are Bitunix reserves verified by third-party auditors?
A: Yes. We work with independent third-party auditing firms to ensure that our reserve figures are accurate and reliable.
Q: Is my personal information visible during PoR verification?
A: No. Our Merkle Tree system ensures that you can verify your inclusion in the reserves without revealing personal account details.
Bitunix Proof of Reserves: Setting the Industry Standard
At Bitunix, we are proud to be leaders in transparency and financial security within the cryptocurrency exchange industry.
Our comprehensive Proof of Reserves system, backed by 1:1 asset holdings, over-reserving, and user-verifiable Merkle Tree technology, ensures that our users’ funds are always secure and accessible.
We encourage all users to utilize our Proof of Reserves verification tools and experience firsthand the transparency and security that Bitunix offers.
