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  1. Home
  2. /Glossary
  3. /Proof of Reserves
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cryptocurrency

Proof of Reserves

A cryptographic method for exchanges to prove they hold enough assets to cover all customer deposits.

Definition

A cryptographic method for exchanges to prove they hold enough assets to cover all customer deposits. After FTX's collapse, proof of reserves became a standard expectation for centralized exchanges. Merkle tree-based proofs let users verify their account is included without revealing everyone else's balances.

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Related Terms

CEX (Centralized Exchange)

A cryptocurrency exchange run by a company that holds your funds and matches orders.

Merkle Tree

A data structure used to efficiently verify large datasets.

Self-Custody

Holding your own private keys rather than trusting an exchange or service to hold them.

Address Poisoning

A scam where attackers send tiny transactions from addresses that look similar to ones you've interacted with, hoping you'll accidentally copy the wrong address from your transaction history.

AI x Crypto

The intersection of artificial intelligence and blockchain technology.

Airdrop

A marketing strategy where crypto projects distribute free tokens to wallet addresses.

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