After FTX vanished with billions in customer money, “proof of reserves” became the phrase every exchange started using. This guide explains what it really proves, what it quietly leaves out, and how to tell a meaningful attestation from a marketing badge.
Summary
- Proof of reserves lets crypto exchanges verify on chain holdings against customer liabilities instead of relying only on trust.
- Merkle trees and zero knowledge proofs help exchanges prove customer balances are included without exposing private account data.
- Proof of reserves improves transparency but cannot fully confirm off chain obligations or guarantee long term solvency.
Proof of reserves is a…
