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Having a safe CEX: proof of solvency and beyond - HackMD

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Summary

This article discusses the importance of proof of solvency for cryptocurrency exchanges, and how to go beyond this to create a truly safe exchange. Proof of solvency is important because it ensures that an exchange has the funds to cover all customer balances. However, this is not enough to guarantee safety, as exchanges can still be hacked or otherwise lose customer funds. To create a safe exchange, exchanges need to go beyond proof of solvency and implement multiple layers of security. This includes things like storing customer funds in cold storage, implementing 2-factor authentication, and having a comprehensive security policy.

Q&As

What is a CEX?
A CEX is a cryptocurrency exchange.

What is a proof of solvency?
A proof of solvency is a method of demonstrating that a CEX has the funds to cover all of its customer balances.

What are the benefits of a proof of solvency?
The benefits of a proof of solvency include increased transparency and improved customer confidence.

What are the challenges of implementing a proof of solvency?
The challenges of implementing a proof of solvency include the need for a third-party auditor and the potential for fraud.

How can a CEX improve its safety?
A CEX can improve its safety by implementing a proof of solvency.

AI Comments

👍 This is a great article on how to keep your CEX safe. I especially like the part about proof of solvency. This is something that every CEX should have.

👎 This article is a bunch of garbage. It doesn't tell you anything you don't already know.

AI Discussion

Me: The article is about how to create a safe CEX, or crypto exchange.

Friend: What does it say?

Me: It talks about how to create a proof of solvency, and beyond that.

Friend: What's the implications of the article?

Me: I'm not really sure. What do you think?

Friend: I think that the article is saying that if you want to create a safe CEX, you need to go beyond the proof of solvency.

Action items

Learn more about proof of solvency and how it can help ensure the safety of crypto exchanges.
Research different crypto exchanges to find one that employs proof of solvency.
Stay up-to-date on the latest developments in the crypto exchange industry to ensure you are using a safe and reputable platform.

Technical terms

CEX: A central exchange where users can buy and sell cryptocurrencies.
Proof of solvency: A method used by exchanges to show that they have the funds to cover all user balances.
Beyond: Refers to the fact that there are other risks besides solvency that need to be considered when using an exchange.