Binance announced a huge upgrade to its proof-of-reserves verification system on, stating that it will now incorporate zk-SNARKs.
On February 10, cryptocurrency exchange Binance announced a significant improvement to its proof-of-reserves verification process. Binance said it would now include zk-SNARKs, a cutting-edge technology that will enable it to verify its reserves in a more secure and transparent way.
Proof-of-reserves verification has become a vital component of the cryptocurrency business after FTX’s collapse in 2022 since it helps verify that exchanges actually retain the assets they claim to.
One of the first exchanges to use the system was Binance, which at first employed conventional cryptography. However, the security and openness of the verification process should be greatly enhanced by its recent upgrade to include zk-SNARKs.
Binance CEO Changpeng Zhao stated that the zk-SNARKs upgrade, which was initially suggested by Ethereum founder Vitalik Buterin, will provide “more privacy and security.” According to him,
“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.”
Short for “zero-knowledge,” Zk-SNARKs A cryptographic method called “succinct non-interactive argument of knowledge” enables one party to show another that they have a given quantity of assets without disclosing any additional information.
As a result, it is said to be a better method for confirming Binance’s reserves because it enables the exchange to demonstrate the presence of its assets while maintaining the secrecy of important data.
Following the FTX crisis, Binance and other well-known exchanges including Crypto.com, Bybit, and OKX implemented a Merkle-tree-based proof-of-reserves method to improve transparency.
Despite this effort, some professionals are still dubious about the system’s efficacy. Paul Munter, the Securities and Exchange Commission’s acting top accountant, highlighted worries that proof-of-reserve filings do not offer adequate documentation for stakeholders to assess a company’s financial viability in an interview with The Wall Street Journal. Despite these complaints, Binance and other exchanges keep working to increase openness in the cryptocurrency sector.
