Crypto Sets Higher Standards for Proof of Reserves for Traditional Finance: Bybit CEO
The new norms after 2022: crypto exchanges have set a high bar in transparency with 100% verifiable proof of reserves.
The future of the crypto industry is one step closer to its full potential, now trust and transparency is at the forefront, said Bybit CEO Ben Zhou. According to Zhou, technology will lead the way in restoring trust in crypto, and legitimate exchanges have what it takes to outperform traditional financial institutions in terms of transparency.
Speaking as part of a panel discussion at Blockchain Life 2023 in Dubai on Monday, Zhou proposed leveraging the open nature and real-time verification that decentralized technology offers. Blockchain is part of the solution, and crypto-native solutions can help armor the financial industry against traditional and new forms of fraud risk. He noted that crypto exchanges are able to offer real-time, verifiable proof of reserves, which is far and above the transparency traditionally offered by financial institutions.
Bybit is committed to managing user funds with the utmost transparency and integrity, which is why it has real-time proof of reserves with a purpose-built Merkle Tree. Users can use their Merkle Leaf code to check that their assets are recorded as liabilities in Bybit’s on-chain wallets down to the granular details.
For Zhou, this kind of technology — powered by blockchain — is the real solution to the constant news of malfeasance in the crypto and wider financial sector. The new industry norm of proof of reserves can offer users more peace of mind and visibility into exchanges’ assets, and this has tilted the conventional power dynamics between the customers and financial service providers, he said.
Zhou went on to talk about the role of crypto exchanges as the industry moves forward from a challenging 2022. While security considerations are a given, Zhou revealed why CEXs are still preferred by serious traders: deep liquidity and powerful infrastructure with millisecond precision.
Referring to institutional clients and professional traders, Zhou said that “centralized exchanges are pretty much their only choice simply because of the liquidity. And you simply can’t do high frequency trading on a decentralized exchange (DEX) due to infrastructure limitations.” However, "Our role — and that of any centralized exchange — is to be ready for mass adoption and be the gateway to Web3 when it happens. So, I still believe in the industry,"
Zhou added. "In two years, you will see signs of mass adoption. Your uncles, your aunties, your cousins will all start to use crypto," he said.