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What is Proof of Reserves (PoR)? - Episode 306 - by cryptohunt.it
What is Proof of Reserves (PoR)?
Welcome to the Cryptohunt Jam, where we spend one minute a day explaining crypto. In plain English.
Have you heard about the latest wrinkle in the stable coin space? Our old nemesis, the Tether stable coin, has reportedly been up to no good, yet again: Instead of keeping one real dollar on hand for each Tether they issue, apparently at least every 10th Tether is back by unstable crypto loans. And as is usual for Tether, they told nobody about it.
Sounds like a bad idea, especially in times of tokens collapsing left and right? Well, it doesn’t have to be this way: “Proof of Reserves” to the rescue: This process creates an independent audit proding proof that a company’s money reserves are what they claim them to be. Essentially, Proof of Reserves creates transparency so you know where your money is invested.
And if you think: “Hey, why wouldn’t anyone want such a report, especially for something that calls itself a stablecoin?” - then you’d obviously be right. But it is not mandatory because there are no government rules yet in most of the world.
But think of it this way: You don’t have to wait for governments to step in. If a financial institution holds your money, but doesn’t have such a report, you can already ask yourself why. Most likely, they have something to hide. Laws or none - it would be a reason to be skeptical.
We’ve called out Tether multiple times in this podcast and hope they change their approach - but it looks like they are only doubling down on intransparency. But now you know what to look for and make up your own opinion.
This podcast is produced by Cryptohunt.it, the easiest place to learn crypto. Copywriting is done by Arndt Voges, Social Media is done by Brett Holleman, design is done by Carmen Rincon, and my name is Christian Byza, Co-Founder of Cryptohunt and I am your host of this daily show.
Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.
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By cryptohunt
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What is Proof of Reserves (PoR)?
Welcome to the Cryptohunt Jam, where we spend one minute a day explaining crypto. In plain English.
Have you heard about the latest wrinkle in the stable coin space? Our old nemesis, the Tether stable coin, has reportedly been up to no good, yet again: Instead of keeping one real dollar on hand for each Tether they issue, apparently at least every 10th Tether is back by unstable crypto loans. And as is usual for Tether, they told nobody about it.
Sounds like a bad idea, especially in times of tokens collapsing left and right? Well, it doesn’t have to be this way: “Proof of Reserves” to the rescue: This process creates an independent audit proding proof that a company’s money reserves are what they claim them to be. Essentially, Proof of Reserves creates transparency so you know where your money is invested.
And if you think: “Hey, why wouldn’t anyone want such a report, especially for something that calls itself a stablecoin?” - then you’d obviously be right. But it is not mandatory because there are no government rules yet in most of the world.
But think of it this way: You don’t have to wait for governments to step in. If a financial institution holds your money, but doesn’t have such a report, you can already ask yourself why. Most likely, they have something to hide. Laws or none - it would be a reason to be skeptical.
We’ve called out Tether multiple times in this podcast and hope they change their approach - but it looks like they are only doubling down on intransparency. But now you know what to look for and make up your own opinion.
This podcast is produced by Cryptohunt.it, the easiest place to learn crypto. Copywriting is done by Arndt Voges, Social Media is done by Brett Holleman, design is done by Carmen Rincon, and my name is Christian Byza, Co-Founder of Cryptohunt and I am your host of this daily show.
Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.