What does Proof of Reserves mean and... - page 2.

Charles-Tim

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Quote from: 2double0 on November 14, 2022, 09:37:39 AM

What is your take on this as an investor in crypto?
Will it add any impact on your decision to get into crypto or stay away from it?

I like bitcoin and crypto in general before their so called proof of reserve, and I will like them after. Before FTX, we have seen many disappointments in the past, but we do not just experienced it. Why? Because it is not good to leave fund on an exchange. People should know that they do not have the private key, they do not have the control, it is not their coins on blockchain. With proof of reserve, you still do not have full control over your coins on exchanges, it can be seized, your account can be blocked, you may need money when withdraw option is disabled. What can perfectly solve this is not to trust your coins with anyone, use a noncustodial wallet.

Do not believe that proof of reserve can not be manipulated.

Ucy

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Quote from: 2double0 on November 14, 2022, 09:37:39 AM

how will it affect anyone's decision to invest in crypto?

Proof of Reserves
Also known as Proof of Funds, Proof-of-reserves is a way to allow customers to monitor the balances of an exchange.¹

This is an important step for the exchanges in order to keep their customers ' and investors' faith alive in crypto. This will make lots of things transparent about many crypto exchanges and will also weed out various bad actors who had been hiding their deeds since long time.

What is your take on this as an investor in crypto?
Will it add any impact on your decision to get into crypto or stay away from it?

...

Who determines the method for proving that a centralized exchange for example really has reserve? What is the trustworthiness of the method? There has to be verifications by users/participants to the smallest details like you have in certain decentralized and transparent systems. It's not right to just trust whatever they tell you without verifications. Only decentralized system like Bitcoin allows transparent and thorough verification hence its a far better system to prove things.

Don't tell me "Trust Me" while you are not transparent enough for probing nor allow people to question your method.

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Quote from: Yatsan on November 21, 2022, 07:08:39 AM

This is due to what happened right? I think there's no need for exchangers to show their proof of reserve to their users. What I'm thinking is agreement between exchangers and users that one's negligence has a counterpart;if it is the fault of exchanger, it should pay the losses of the user but if it is user's negligence with regards to his profit loss, exchangers has nothing to do with it. Quite one sided on impression right? but users doesn't need to pay the exchangers unless they would complain of something and if it is proven user negligence, that would be the time they should pay the exchangers. In this case there would be more sense of responsibility with each assets. In terms of land based banks, there's an agreement that no matter what, they should pay atleast half of the users' asset if they'd be on bankruptcy; this is the idea I am trying to point out.

For sure it is really pertaining on the current issues or situations that we are in when it comes to exchange platform issues and disasters where people been asking out about proof of reserves.
Actually we cant really be able to determine even if they do tend to do so.Why? monitoring transactions with those wallet addresses cant really assure about incoming or outgoing
big transactions which it is really hard to point out if its just a simple whale withdrawal or someone whose been part of the team is doing such thing.
There's no way on tracing it out.Somewhat having this kind of proof does really give out that kind of transparency which would give out some confidence.

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This is a very old discussion which has its roots in something called fractional reserve banking. For crypto this stems back to the 2017 topic of bitfinex and tether. There was an investigation launched in 2017 to see whether tether had the liquidity to buyback every token they issued at a price of $1 in order to maintain pegging to the dollar. This is essentially identical to a gold standard where a government guarantees every dollar it issues can be redeemed for its value in gold. As financial standards go, there are very high ratings.

Modern finance has drifted in the direction of greater risk and greater profits. Which is generally associated with higher credit and liquidity. Low(er) fractional reserves correlates with all of these trends, as does modern inventions such as trickle down economics and modern monetary theory.

Rikafip

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Quote from: 2double0 on November 14, 2022, 09:37:39 AM

What is your take on this as an investor in crypto?
Will it add any impact on your decision to get into crypto or stay away from it?

While Proof of Reserve is probably a step forward, I personally don't care about it and won't make me feel trust centralized exchanges and platforms any more than I (dis)trust them now. Big problem with it is that it can be manipulated with, and since it can, it will.

Since I am already in crypto and not using centralized exchanges to buy bitcoin, whether it gets introduced or not won't have any impact at me at all, but I do expect that newbies will look at it as a sign that platform is 100% secure, which of course is a huge mistake.

Tony116

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Proof of reserve will make things more transparent but there is also no guarantee that your funds will be safer on those centralized exchanges. POR will tell us the status of the exchange's asset reserves, but it cannot prevent our account from being closed or block withdrawals. This means if an exchange doesn't want to do business anymore but they don't want to pay us, they will also have full right to suspend all withdrawals and then declare bankruptcy. There's nothing we can do about it either.

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I believe this will slightly impact user trust. and Proof of reserve should have been implemented long ago. But it seems that the FTX tragedy has turned the exchange in a more positive direction. more open and transparent will certainly make users feel a little more secure. and I will also choose an exchange that already uses Proof of reserve on their exchange. But still, an exchange is not a safe place to store assets. we should only use exchange only for exchange and nothing more. after completion, save the assets back in your personal wallet.

tabas

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I think Vitalik and CZ is working on something right now that focuses on having this protocol, the proof of reserve.
News: Binance CEO CZ begins working on Vitalik Buterin’s ‘safe CEX’ ideas
Vitalik Buterin Will Help Binance Prove Its Reserves, CZ Says

It's a matter of being transparent to their customers. What I like with this is that, the game for exchanges are stepping up and this gives the advantage more with the users to have that push for these exchanges to have that sense of being transparent.

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I think that some (see the so called mistakenly sent money to gate.io) are already trying to fake those "proofs".
Then, let's say certain service is showing a correct proof for its reserves; do you know how much is the actual worth of user funds deposited there so you can match?
Even more, what stops a centralized service use those reserves as collateral for other fund they'll get and use somewhere else, showing proof of reserves that aren't actually their funds any longer?

So this proof of reserves is a nice advertising some exchanges want to pull... and not much more.
Always think and get the public information with a pinch of salt. All they want is to keep you confident in their system. It doesn't mean that whoever wants cannot trick that. Learn that not your keys is indeed not your coins and be more careful, with or without that proof of reserves.

Yatsan

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This is due to what happened right? I think there's no need for exchangers to show their proof of reserve to their users. What I'm thinking is agreement between exchangers and users that one's negligence has a counterpart;if it is the fault of exchanger, it should pay the losses of the user but if it is user's negligence with regards to his profit loss, exchangers has nothing to do with it. Quite one sided on impression right? but users doesn't need to pay the exchangers unless they would complain of something and if it is proven user negligence, that would be the time they should pay the exchangers. In this case there would be more sense of responsibility with each assets. In terms of land based banks, there's an agreement that no matter what, they should pay atleast half of the users' asset if they'd be on bankruptcy; this is the idea I am trying to point out.

2double0

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how will it affect anyone's decision to invest in crypto?

Proof of Reserves
Also known as Proof of Funds, Proof-of-reserves is a way to allow customers to monitor the balances of an exchange.¹

This is an important step for the exchanges in order to keep their customers ' and investors' faith alive in crypto. This will make lots of things transparent about many crypto exchanges and will also weed out various bad actors who had been hiding their deeds since long time.

What is your take on this as an investor in crypto?
Will it add any impact on your decision to get into crypto or stay away from it?

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