This comes after CZ revealed that Binance would buy its rival FTX in order to protect against the liquidity crisis it is experiencing.
The CEO of Binance, CZ, recently suggested that all cryptocurrency exchanges perform merkle-tree proofs of reserves. He added that, unlike banks, cryptocurrency exchanges, shouldn’t operate on fractional reserves. In order to allay future uncertainties and worries regarding the reserve balance, CZ promised his 7.3 million Twitter followers that Binance would also begin proof-of-reserves for complete transparency.
This comes after CZ revealed later today that Binance would buy its rival FTX to protect against the liquidity crisis it is experiencing as a result of the large-scale capital withdrawals. Binance has emerged as one of the largest exchanges globally.
What is a Merkle-tree?
Data synchronization and verification are two uses for the sort of data structure known as a Merkle tree, also known as a hash tree. Each non-leaf node of the tree data structure is a hash of the nodes it contains as children. It uses hash functions to preserve the integrity of the data.
Applications of Merkle-tree:
In distributed systems where the same data needs to be present in various locations, mergel trees are helpful. It can be used to look for contradictions. Merkle trees are therefore also extensively used in blockchain and bitcoin.