Proof of Solvency is the result of both the Proof of Reserves and the Proof of Liabilities, with reliable mechanisms to validate that the total amount of assets held in custody is larger than the total amount of liabilities. Additionally, in case the custodian holds reserves in cryptocurrencies, it is also required to prove ownership over the keys to the accounts where the funds are.

It is the most important proof of financial health a custodian can provide to its customers. Knowing that a financial institution is solvent gives you, as a customer, the guarantee that your money is at your disposal whenever you want to use it.

Learn about the components of the Proof of Solvency here:

**Methods to provide a Proof of Solvency**

There are two main ways to prove solvency. We're going to name them as:

- Traditional way
- Cryptographic way

The traditional way goes by inviting a third party auditor firm to go through the organization numbers, accounts, and other sensitive information to come up with a report with the statement of solvency. The implications of this method is that it is slow, costly and not private, since a third party has access to such data.

The cryptographic way goes by using an innovative technology called Zero-Knowledge. With this method, an organization can create a cryptographic proof (zk-proof) by which one party can prove to a third party that its statement of solvency is true without revealing any additional information.

To learn how the cryptographic way works, read:

**Bitso's roadmap to Proof of Solvency**

Bitso is now implementing Zero-knowledge as its methodology to prove solvency. It is a huge step, but it's not all. To create a definitive proof of solvency, we are aware that there are some more additional steps to be taken.

So here's what you can expect from us in the coming months:

- Creating an industry work group to create better standards and practices to the crypto ecosystem.
- Collaborating with regulators to implement rules and standards that improve the customer's experience and security while using crypto-exchanges.
- Collaborating with Proven, our zero-knowledge technology provider, to add more cryptocurrencies to its solvency reports.

But you can already benefit from the zero-knowledge technology by reviewing Bitso's latest solvency reports:

- How is Bitso providing a Zero-Knowledge proof?
- What is Bitso's solvency report? How should I interpret it?

*For informational purposes only, this is not investment advice. When buying, selling, trading or using cryptocurrencies you are subject to certain risks including price volatility and loss of capital, for more information please visit the following **link**.*