"Michael Saylor Discusses the Potential Drawbacks of On-Chain Proof-of-Reserves"
Michael Saylor, Executive Chair of Strategy, has vocalized concerns about the use of on-chain proof-of-reserves (PoR) in the cryptocurrency sector, stressing potential security risks and AI-related vulnerabilities.
Addressing the growing trend of industry adoption, Saylor expressed reservations about the transparency measure during a panel discussion at the Bitcoin 2025 conference. He argued that it weakens the security of issuers, custodians, exchanges, and investors, posing significant risks in terms of exposure, security breaches, and incomplete financial disclosure.
Saylor noted the lessons to be learned from the failures of prominent exchanges like FTX and Mt. Gox, but emphasized that PoR is not an appropriate response. He further warned that revealing all wallet addresses, a key component of PoR, could potentially unleash AI-generated threats, as AI could be programmed to identify numerous security flaws.
Highlighting the inadequacy of PoR in showcasing a company's financial health, Saylor urged institutions to focus on holistic accountability measures that offer a clearer picture of their asset management and liability coverage.
Meanwhile, there was no conclusive response from Saylor when asked whether Strategy would consider implementing PoR. The method gained prominence following high-profile exchange collapses, aiming to demonstrate an institution's solvency.
In related news, Strategy recently announced the acquisition of an additional 4,020 BTC at a cost of nearly $430 million, growing its BTC holdings to 580,250. Despite this, the firm ended the day on May 26, 2025, with a 7.50% dip in stock price.
[Associated Enrichment Data]- On-chain proof-of-reserves can potentially expose sensitive information to malicious entities, increasing the risk of tracing and attacks on various parties involved in the cybersecurity landscape.- Publication of reserve data invites hacking, surveillance, and exploitation, compromising the overall security of institutions, custodians, exchanges, and investors.- Publishing PoR only provides a snapshot of assets held, without reflecting liabilities and offering a comprehensive understanding of a company's financial health.
- Michael Saylor, during a panel discussion at the Bitcoin 2025 conference, raised concerns about the use of on-chain proof-of-reserves (PoR) in the cryptocurrency sector, arguing that it weakens the security of issuers, custodians, exchanges, and investors.
- Saylor argued that PoR could potentially unleash AI-generated threats, as AI could be programmed to identify numerous security flaws by analyzing the revealed wallet addresses, a key component of PoR.
- Highlighting the inadequacy of PoR in showcasing a company's financial health, Saylor urged institutions to focus on holistic accountability measures that offer a clearer picture of their asset management and liability coverage.
- Despite Strategy's recent acquisition of 4,020 BTC, increasing its total BTC holdings to 580,250, the firm ended the day on May 26, 2025, with a 7.50% dip in stock price, suggesting potential challenges in the overall crypto market.
