Cryptocurrencies, blockchain, NFT and new trends

Binance deploys zk-SNARKs on proof-of-reserves system

Quick Take

  • Binance is deploying zk-SNARKs to its proof-of-reserves (PoR) system to let users verify funds held on the platform.
  • Binance had released a PoR system solely based on Merkle Trees, which it found was not ideal for user privacy.

Binance, the largest centralized cryptocurrency exchange by volume, has incorporated a type of zero knowledge proofs called zk-SNARKs into its proof-of-reserves verification. This is to attest that funds held on the platform are backed 1:1 while preserving the privacy of sensitive user data.

Currently, this updated PoR system supports verifying the exchange’s reserves for 13 different crypto assets.

The exchange made this addition in response to growing concerns from investors about the safety of their funds on cryptocurrency exchanges. Binance had previously released a PoR system solely based on Merkle Tree — a data structure used in cryptography that can be used for verification.

The Binance team found the Merkle Tree-based system alone was not ideal for user privacy, so it added support for zero-knowledge proofs.

“Continuing the efforts in providing transparency on user funds, Binance is excited to introduce zk-SNARKs, a zero-knowledge verification method that keeps sensitive information private and more secure, to its proof-of-reserves (PoR) verification system,” the exchange said.

Zk-SNARK is a cryptographic tool for verifying or proving certain information without actually showing or revealing what that information is. Binance has also decided to make the zk-SNARK software open-source, allowing anyone to review the code. The team maintains that by making it open-source, it can build greater trust on the platform.