How to read an exchange's proof of reserves: 4 checksBitcoin / U.S. dollarBITSTAMP:BTCUSDtakamecheckThis is an educational note, not a trade idea. It is about how to judge whether an exchange's proof of reserves actually tells you anything. Proof of reserves is only meaningful if it shows liabilities as well as assets, is recent, names who verified it, and lets you check the wallet addresses yourself. A page that shows only a wallet balance proves the exchange has coins, not that it has enough coins for what it owes customers. The question it should answer: does the exchange hold at least as much as it owes its customers? An exchange holding 10,000 BTC looks strong until you learn it owes customers 12,000 BTC. Four things to check 1) Liabilities are included. Look for total customer balances, not just wallet totals. The usual method is a Merkle tree that lets each customer confirm their own balance was counted. 2) It is recent. Reserves move every day. A report from last year describes a company that no longer exists in that form. 3) Someone outside the exchange checked it. An auditor or a named verification firm, with a report you can read, not a banner on the exchange's own homepage. 4) The addresses are public. If wallet addresses are published, anyone can check the balance on-chain. If they are not, you are trusting a number in a PDF. What does not count - A screenshot of a wallet balance. - "100% reserves" written in marketing copy with nothing behind it. - A signed message proving control of an address, with no statement of what is owed. - An attestation whose scope excludes the entity that actually holds your money. Borrowed coins, and why timing matters An exchange can borrow assets shortly before a snapshot and return them after. That is why a one-off report is weaker evidence than regular reports, and why the date matters as much as the number. Its limits Proof of reserves is a photograph, not a guarantee. It says nothing about debts owed to lenders, about whether client assets are legally separated from company assets, or about what happens tomorrow. Read it next to the exchange's licence status, not instead of it.