Proof of Reserves
What a whirlwind the past 48 hours have been in the cryptocurrency space. One of the biggest exchanges - FTX, basically collapsed, USDT depegged, and Binance shared their "proof of reserves. I have had the worst migraine I've had in a while today, but despite this I have been able to watch the madness unfold while laughing. I hate that people are losing money, and hate that some people will never receive the money that they had on FTX... But at the end of the day, it's your responsibility to hold your own cryptocurrency. If it's sitting on an exchange, it's not safe. That's just where we're at.
Binance sharing its proof of reserves earlier today actually excited me. After digging into some of the wallets, I still had some questions. For what it's worth, though... They did actually share the holdings of a ton of tokens on the BSC and BC chains. This inspires a lot of trust in the users of any Binance products, especially wrapped tokens on their 2 blockchains. This is actually a really good thing for the entire space in my opinion. My first thought was "when Coinbase proof of reserves?".
Looks like OKX and Kucoin are going to beat them to it, though. The more of these "proof of assets" style reports start coming out from exchanges, the better. A lot of this crypto shit is built solely on trust, and when that trust comes into question... It needs to be answered. When customer decide to mass-withdraw from your platform, you should be able to manage those withdrawals and not come up $8 billion short. This kind of complete fuckery, for lack of a better word, is what makes people so scared to invest in a lot of cryptocurrencies and projects.
It's also the same kind of things that makes regulators say "We tried to tell you crypto is bad". Just look at the US Whitehouse stating that crypto needs oversight to avoid harming Americans. This is no surprise at all. The regulators that be have been trying to find a way to completely regulate crypto. They want their tax money, you know. So when a major crypto exchange is found to be insolvent, the regulators can step up and try to act like heroes to get votes. It's a lot of political stuff I don't wanna get into. My point is, FTX collapsing is bad in so many ways. We need a new standard.
OKX took no time at all to tweet out a bunch of the BTC wallet addresses for people to check their assets. We need Coinbase to step up and do the same thing. Obviously this doesn't mean we can just automatically trust these entities with our assets, it just provides proof they can give you your assets at any time. It adds a certain level of trust, and after events like these that's invaluable. I definitely wanna know that a platform I'm putting money into can give those funds back when I want them. This doesn't mean they can't choose to just not return your funds, but at least you can see that they aren't being lent out to others by degenerate CEOs.
People will learn a lot about doing their research and trusting any project after this, I hope. Probably not though. We're all just a bunch of degens, but be smart people. Don't leave your precious shitcoins sitting on centralized exchanges. At bare minimum, do it on a platform that has verifiable assets to back their derivatives.
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