What is proof of reserves?
A published attestation that a platform holds assets matching customer balances at a point in time.
Proof of reserves is an exercise in which a platform demonstrates control of assets corresponding to what its customers are owed, often using a cryptographic tree that lets an individual verify their own balance was included.
Why it matters
It proves far less than the name suggests, and this is worth being precise about. A reserves attestation shows assets at a moment in time; it says nothing about liabilities unless those are attested alongside, and a platform can be fully reserved and still insolvent if it owes more elsewhere. It also cannot show borrowed assets moved in for the snapshot. A proof of reserves without a matching proof of liabilities, performed by an independent party, is a marketing artefact rather than a solvency guarantee. Treat it as one weak positive signal, not as assurance.