Customers as auditors: Verifying the assets we have in reserves.
Bamboo is a micro-investments platform that allows anyone to seamlessly purchase digital assets. This is part 3 in our series on Proof of Solvency, check out our previous blogs for more information.
The first part of proving we are solvent is to prove the amount of assets that we have in reserve. We could produce a signed document stating our assets but we don’t think you should have to take our word for it (or an auditor’s). We think that you should be able to verify and audit it for yourself.
Thankfully, digital assets on public ledgers have a useful property that helps us to achieve this — they are publicly verifiable. This means that any individual is able to independently access the data on the public ledger to verify a statement made regarding that asset.
In order to prove our reserves, we will digitally sign a statement for each digital asset address that we control. This is similar to a signature in the real world except it is unforgeable, requiring the use of the address’ private key (only known to Bamboo) in order for it to be valid. This signature can then be verified by anyone using the corresponding public key (available on the ledger) of that address.
In order to prove our reserves, we will digitally sign a statement for each digital asset address that we control.
The signed statement will attest that we control the asset and includes the latest block hash from the Bitcoin blockchain. Since we cannot know the hash of a block prior to its creation, this prevents us from potentially generating a year’s worth of signatures ahead of time. The statement we sign will be published on our Twitter page and on our website.
The ability to generate valid signatures is sufficient to prove that we control those addresses. This is because the requirement to generate the signature, knowledge of the private key, is what is also needed to transfer the assets stored in those addresses (i.e. for us to manage them for our customers).
Customers will be able to take the list of our addresses and signatures, combined with our public statement to confirm the total assets that we have under our control at that point in time. We will regularly update the signatures to provide on-going reassurance that we are still in control of the assets in those addresses.
Next week we will explain how we use this informations to let users check that we are solvent.
– With 🌱 from the Bamboo Team
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