Summary
Bitvavo ensures full transparency with Proof of Reserves attestations, verifying that customer assets within scope are backed 1:1. This process, commonly used across crypto exchanges, is aimed at increasing transparency regarding the assets held on our exchange.
In this article, you’ll learn:
- What Proof of Reserves means for a crypto exchange
- How to verify your crypto Proof of Reserves at Bitvavo
- How Proof of Reserves attestations work
Please note that this verification will only reflect a customer's account balance in the in-scope assets at the time of the review. It will not account for any subsequent trades or transactions, nor will it reflect balances held in assets that are out of scope.
What is Proof of Reserves?
Proof of Reserves (PoR) is a verification method used by crypto exchanges to demonstrate that customer assets are fully backed by in-kind assets. This process confirms that a custodian holds the assets it claims to on behalf of its customers. A third party takes an anonymized snapshot of all balances and aggregates them into a Merkle tree.
A Merkle tree is a privacy-friendly data structure that encapsulates all customer balances.
Key Features of Proof of Reserves:
- 1:1 asset backing – Every deposited asset within scope is fully accounted for.
- Independent Proof of Reserves attestation – Regular verification by an independent third party.
- Crypto Proof of Reserves verification – Users can verify their balances against attestations conducted on a quarterly basis.
- Transparency – Reserve ratios for in-scope assets are published at regular intervals. Bitvavo publishes the reserve ratios each quarter.
How to verify your funds in Bitvavo’s Proof of Reserves attestation
You can confirm that your funds are included in Bitvavo’s Proof of Reserves by following these steps on our website:
- Go to Bitvavo and log in.
- Navigate to Profile on the top right and select Security from the menu.
- Click Proof of Reserves on the top right.
- Choose a date range to view past Proof of Reserves attestations.
- Click on "Verify now" to view Proof of Reserve Summary.
- Download your attestation report from our independent accounting firm.
How Bitvavo’s Proof of Reserves works
-
Balance Snapshot
An independent accounting firm takes an anonymized snapshot of all user balances at a specific point in time. -
Merkle Tree Encryption
A cryptographic method structures balances into a Merkle tree, ensuring data integrity and preventing tampering. -
Verified Reserve Ratios
Bitvavo publishes quarterly Proof of Reserves for crypto assets within scope, showing exactly how assets are backed by in-kind assets. -
User Verification
Clients can confirm their funds are accounted for in the latest Proof of Reserves attestation using a unique Merkle root.
Why is Proof of Reserves important for crypto exchanges?
- Increases Trust – Bitvavo holds sufficient assets to cover customer liabilities.
- Ensures Historical Transparency – A record of exchange reserves demonstrates financial stability over time.
FAQs
How often does Bitvavo perform Proof of Reserves attestations?
Bitvavo conducts attestations quarterly to ensure continuous transparency. These attestations are performed by an independent accounting firm.
As of December 31, 2024, Bitvavo’s Proof of Reserves covers BTC, ETH, XRP, EUR, ADA, SOL, DOGE, VET, LINK, HBAR, SUI, FET, and SHIB. We will be covering more assets in the future.
What is a Merkle tree?
A Merkle tree (also known as a hash tree) is a data structure used for data verification and synchronization. It is a tree structure where each non-leaf node is a hash of its child nodes. All the leaf nodes are at the same depth and are positioned as far left as possible. It maintains data integrity and uses hash functions for this purpose.
How does the Merkle tree protect my privacy?
The Merkle tree method allows a third-party accounting firm to verify a crypto exchange's Proof of Reserves without having access to individual user balances, thus ensuring privacy and security.