Last Updated on November 27, 2022 by Bitfinsider
ProEX Offers Merkle Tree Proof-of-Reserve to Enhance Crypto Asset Transparency
Many exchanges have pledged to provide their proof of reserves since the FTX crisis began. Others have announced offering a Merkle Tree Proof-of-Reserves solution to their users in an effort to increase the transparency of crypto assets. ProEX will also be presenting the Merkle Tree Proof-of-Reserve
But what precisely is a Merkle Tree Proof-of-Reserve, and how does it benefit exchange transparency with regard to crypto assets?
Binary hash trees, sometimes referred to as Merkle trees, are a common data structure in computer technology. Merkle trees, on the other hand, are used in cryptography to more effectively and securely encrypt blockchain data. It also makes it possible to quickly and securely verify the content of large databases, as well as the accuracy and consistency of the data.
Merkle trees create a digital fingerprint of the full collection of operations by integrating every transaction in a block. As a result, the user is able to confirm whether it contains a transaction on the block.
The Merkle Tree makes it simple and rapid to verify a lot of data, which encourages transparency. Massive amounts of data are combined into a single hash, and the data set’s integrity is effectively verified. Therefore, Merkle Tree Proof-of-Reserves technology increases institutional reserve transparency while simultaneously giving customers quick access to asset security verification.
As a result, utilizing this technology, one can decide on a variety of aspects, including:
- Verify the data belongs to the Merkle Tree
- To unequivocally demonstrate the veracity of the data included in a dataset
- Without disclosing all of the data or a fraction of it, to confirm the accuracy of a certain set of data being included in a bigger data set
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