We are proud to present this overview of our process to the crypto-currency community. We believe that audit processes are a good way to provide some level of assurance, and we have faith that Bitcoin industry is able to provide a higher level of assurance and accountability than traditional financial services industry.

Following the Kraken trend, the first to use a variation of Greg Maxwell's Merkle Tree to perform fully cryptographed and individually verified audit processes, Fairlay now presents its own variation of this proposal.

At Fairlay we want to have complete transparency in how we hold our customers funds, so we are enabling all users to verify their individual holdings on the blockchain itself through our proof of reserves.

You can verify that the total amount of bitcoins held by Fairlay will always exceed the amount credited to our users. In a way to prove to our customers and third parties that their funds are safely held, we provide mathematical proof that holds full reserves.

Over 100% of all customer funds are kept in a cold storage and the sum of all issued credit to our customers will always be less than the amount of Bitcoins in our cold storage address, which is 1EV8YeieYEZ7iksGT9jS7KdcbE12pk4FwZ.

A modified version of Merkle Sum Trees is used to perform the proof and as the test passes you are guaranteed that your balance is included in our cold storage funds.

To reach the proof of reserves page, you have to open up the info menu on our homepage, where you may select Proof of reserves. Then, to continue the audit process, login on your Fairlay account.

Here you can check how our merkle tree audit works.

Make the monitoring personally:  every user can do the audit

Users can make the monitoring of merkle tree personally using the current top hash at https://twitter.com/FairlayPReserve. This top hash represents the root of the tree, the user ID generates its leaf and the listing of nodes containing the user leaf's path to the mentioned root.

Each object in the list has the following elements:

  • Layer: the number of respective layer node. Layer 1 will be generated through the user data.
  • Balance: the summed balance of all branches (below the current)
  • Hash: branch hash
  • Neighbours: Current branch's neighbour (used to check the nest hash).

An independently verified audit shows the transparency our customers deserve. Customers can make their personal audits by following these steps:

  1. The balance of our cold storage address in mBTC (at time of writing 1274000) at https://blockchain.info/address/1EV8YeieYEZ7iksGT9jS7KdcbE12pk4FwZ;
  2. The current top hash from https://twitter.com/FairlayPReserve (is renewed every 30 minutes);
  3. Logged with your user at Fairlay access https://fairlay.com/proof-of-reserves/, There you’ll see:

For advanced users is also possible to make a call at Fairlay’s API to fetch same informations and verify the merkle tree:

  1. Fairlay DotNet Client (https://github.com/Fairlay/FairlayDotNetClient);
  2. Exact total balance in mBTC;
  3. The balance of our cold storage address in mBTC (at time of writing 1274000);
  4. The current top hash from https://twitter.com/FairlayPReserve (is renewed every 30 minutes);
  5. API Username (can be retrieved via https://fairlay.com/proof-of-reserves/ and also be changed via the API);

Now use the DotNet Client and call:

bool fundsVerified = await privateApi.VerifyProofOfReserves([your exact total balance], [your API ID], [current top hash], [cold storage balance]);

And your independent and cryptographically verifiable proof of reserves audit will be done.

An audit that can not be independently verified or that is not trustless can be very superficial that is why our intention is to provide our customers a cryptographic proof of reserves audit. Our process does not require to disclose addresses or keys to the public.

Come to Fairlay and do your own audit by following our tutorial above. The transparency you want with the security you deserve.