What is Proof of Reserves (PoR)? And, Lets know about the Countries that are Most Interested in Proof of Reserves:
Proof of Reserves (PoR) is a way to verify that an institution (e.g., a crypto exchange) holds sufficient reserves backing all customer balances. It is ideally conducted by an independent third-party auditor. Here, the Reserves refer to assets held by an institution.
PoR is intended to allow customers a means of assessing an institution’s solvency and liquidity.
Generally, PoR in the crypto industry involves a snapshot of customer balances in the form of a Merkle tree. This data structure allows customers to independently verify that their assets are included in the snapshot balance.
The collapse of Sam Bankman-Fried’s FTX triggered at least $20.7 billion in withdrawals from centralized cryptocurrency exchanges. Seeking to reassure users, the remaining cryptocurrency exchanges announced efforts to increase disclosures on their financial positions. This pushed the concept of Proof of Reserves (PoR) into the spotlight among the crypto community, such that global search interest in PoR spiked in the week of November 6 by 270% week-on-week, then peaked the following week.
The majority of global search interest in PoR-related terms this year came from Singapore (20.5%), Nigeria (14.1%), Hong Kong (11.4%), Austria (7.8%) and the Netherlands (7.0%), which held a combined 60.8% share as of December 6.
Cryptocurrency hub Singapore topped the rankings as the country most interested in PoR. The city-state scored the highest of 100 for ‘proof of reserves’, ‘merkle tree’ and ‘merkle root’, resulting in a total score of 300 to place first among the top 25 countries interested in PoR.
Nigeria ranked second for search interest in PoR with a total score of 206, after scoring the maximum of 100 for ‘proof of reserve’, as well as receiving relatively high points of 49 for ‘merkle root’, 35 for ‘merkle tree’ and 22 for ‘proof of reserves’. An earlier study had found that Nigeria was the most curious about cryptocurrency among English-speaking countries.
Hong Kong came in third for PoR search interest with a total score of 167, by scoring the second highest for ‘proof of reserve’ at 92 points, as well as the third highest for the remaining terms of ‘merkle root’, ‘merkle tree’ and ‘proof of reserves’ at 37, 21 and 17 points respectively.
Austria took fourth place with a 115 total score, followed closely by the Netherlands with a 102 total score. Both European countries saw relatively strong search interest in ‘proof of reserve’, and moderate interest in ‘merkle tree’ and ‘proof of reserves’, but had insufficient search interest data for ‘merkle root’.
Methodology:
The study examined relative search popularity by locations, for four English terms related to the concept of Proof of Reserves — ‘proof of reserves’, ‘proof of reserve’, ‘proof of liability’ and ‘merkle tree’ — based on Google Trends data. Terms were selected from the study on PoR search interest over time.
The location setting was ‘Worldwide’ and the time range was set from January 1 to December 6. The two remaining parameters were left to the default options of ‘All categories’ and ‘Web Search’.
The numbers represent relative search popularity compared across locations, for a selected term and time. A value of 100 indicates maximum popularity as a proportion of total searches and a value of 50 indicates half the popularity, while a score of 0 means there was insufficient search interest data. The locations were then ranked by their ‘Total Search Score’, which was obtained by adding up the search interest for the four terms.
The study notes that the most widely used search engines for all locations may not be Google.
All dates stated are in 2022.
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