How should I interpret the information shown in the Proof of Solvency webpage?

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The Proof of Solvency web page is a work in progress. For the time being, you can find Bitso's Merkle Tree with the liabilities report and a table that shows the collateral ratio for each asset in your wallet.

For more details on the next steps in Bitso's Proof of Solvency, please check: 

Although this is just the first step in our plan to show solvency, the webpage still has valuable information. Here we'll detail each component in the webpage, and explain how you can use them to verify that Bitso is properly guarding your balance.

Let's take a look:

 

Select a date to review

First, you'll be presented with date and time options to select from. Each date and time represents a Merkle Tree Snapshot, which works as a screenshot of the Merkle Tree at a given time. Instead of showing a screenshot picture, it will show a picture of the information data hashed in the tree.

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Learn more about Merkle Tree Snapshots here:

 

Liabilities report

In short, liabilities are the total amount of deposits from customers that Bitso holds under its custody. For the time being, these reports are user audited, meaning that you can verify by yourself, in the Merkle Tree, that your balance has been included in the report. We’re working on being able to provide a Proof of Solvency through which these liabilities will later be compared to our reserves. 

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Important: since the reports are generated on top snapshots, they won't reflect your balance in real time. That is, if you had no balance in crypto by the time of the report, you should see this screen instead:

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Learn more about Proof of Liabilities:

 

Download the Merkle Tree

By downloading the Merkle Tree, you'll get a copy of the snapshot from the date you selected to review. This snapshot will contain the hash of all customer's balances. With this file, you can use Your hash to calculate and find the Root hash to verify that your balance was properly included in the report.

Merkle_Tree_Donwload___Proof_of_Solvency_.png

Learn what a Merkle Tree is here:

 

Root hash

The root hash is a digest that reflects every node hash in the Merkle Tree, including each leaf hash of a user balance. Due to how this method works, you can use your hash to calculate and find this root hash. With the root hash, you can attest that the balance of your account hasn’t been tampered with.

Root_hash___Proof_of_Solvency_.png

Learn more about Merkle Tree here:

 

Your hash

It is a leaf hash in the Merkle Tree that represents your account balance. This hash can be used to verify if your balance was properly included in the liabilities report you've selected to review.

Leaf_hash___Proof_of_Solvency_.png

Learn how to calculate and verify manually the inclusion of balance:

 

Your account code

The account code is an ID that works exclusively for this liabilities report. Instead of using your Bitso ID, we decided to create a pseudonymous one that will be used to calculate your hash and can be used to trace back the inclusion of your balance into the Merkle Tree.

This approach improves the privacy and security of implementing a Merkle Tree for liabilities report. But be aware: you should keep this identifier private at all times in order to prevent unlikely, but possible, leakage of your balance information.

Unique_Identifier___Proof_of_Solvency_.png

Learn how to calculate and verify manually the inclusion of balance:

 

Balance and collateral ratio

After presenting you the root hash and your hash in the Merkle Tree, the page will show the details of your balance when the report was generated and the collateral ratio for each of the assets that you hold. From this, you can ensure that your assets were properly included in the report and that Bitso has enough reserves for each of those assets.

Notice: This is a snapshot, so if you performed any trade, deposit, or withdrawal after the date and time of the report, those actions won't be reflected. Also, the liabilities report only considers cryptocurrencies, so local currencies and USD won't be presented.

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You can learn more about collateral ratio:

 

The next steps for proving solvency

To show solvency, it needs to show more than proof of liabilities and proof of reserves – and we are aware that the Merkle Tree itself is not enough to do this. We have a roadmap to implement a full and efficient Proof of Solvency at Bitso, and this section includes articles explaining the next steps we’ll take and how we're planning to implement them.

Next_steps___Proof_of_Solvency.png

For further information, you can also check out the following articles:

 

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.


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