Blockstream Tool To Confirm Bitcoin Balances On Exchanges
Crypto firm Blockstream has developed Proof of Reserves, a tool which will help crypto traders to make sure that there is enough funds in bitcoins on trading platforms, according to a press release.
The company claims that crypto exchanges are often under pressure from customers and financial regulatory organizations, which require evidence of proper asset management. Especially this pressure became noticeable after the resonant cases of platform hacks. If a company values its reputation and wants to retain users' confidence, then it needs to prove the existence of reserves in bitcoin.
Crypto exchanges use different tools to convince users in sufficient amount of cryptocurrency, but not all of them can be called convenient and reliable. Blockstream experts have developed a universal tool – Proof of Reserves.
The aim of Proof of Reserves is to create a transaction that combines all unspent transaction outputs (UTXO) of the crypto exchange, while adding the only invalid input. In this case, the entire transaction is considered invalid, the network does not accept it but confirms the solvency of the trading platform.
The tool was primarily developed for Liquid sidechain, which was launched in the fall of 2018, but the developers later decided to make it available for wider use.
As previously reported, Blockstream has launched a beta version of the network, which will conduct bitcoin payments via space satellites.