Blockchain company Blockstream created a tool Proof of Reserves with which cryptocurrency exchanges may confirm the presence of their reserves in bitcoin.

Regarding the recent discussion around exchange distrust, we think it’s time for the industry to settle on a standard for proving #bitcoin holdings, so we’ve published a new open source Proof of Reserves tool. Don’t trust. Verify. 📖🔍🔏

— Blockstream (@Blockstream) February 5, 2019.

Proof of Reserves creates a transaction that uses all unspent transaction outputs (UTXO) of the exchange and adds one incorrect output. Thus, the entire transaction is considered invalid and will not be accepted into the network, however, it confirms the solvency of the platform.

Initially the decision was created to sidechained Liquid, which was launched in October 2018, but in the future it was decided to expand the scope of its application.

The developers warn, is that the tool creates Proof of Reserves evidence may contain too much critically important information. In this regard, they offer exchanges or use a sidechained Liquid, or to wait for the improved version, which can be provided to any client trading platform.

We will remind, in January Blockstream presented the third version of the service Cryptocurrency Data Feed that collects information on trade pairs with more than more than 30 exchanges.

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