Provable Solvency Implementations

Question

Is there a list of provable solvency implementations? It appears to be that each company is taking their own unique swing at the problem. This strikes me as an area that could benefit from standardization.

Answer 1

I do not know of a definitive list of provable solvency implementations. Some of the current implementations however do show signs of similarity even if you cannot call that standardization.

For example, tether.to ( https://tether.to/ ) backs every tether with a US dollar. That's 100% backing. This is not unlike the discarded gold standard where treasuries formerly backed a currency one to one. This was a provable solvency standard accepted by the international community for decades.

Bitfinex ( https://www.bitfinex.com ) keeps a balance of tether - and publishes exact numbers within its website - in line with its user obligations. Other players similarly strive to exhibit transparency in their financial transactions.

Some altcoins link the value of their coin to a tangible asset, such as marijuana. At the same time most people might agree that even an altcoin backed by a high value tangible asset is still not a provable solvency.

Transparency does not prove solvency. Maintaining a 100% reserve of capital assets versus capital liabilities does not prove solvency. Unless you have unfettered access to a Balance Sheet created with industry recognized fundamental accounting principles, with clear asset, liabilities and equity statements, and that these statements are truthful and complete, then there is no 100% verifiable method to ascertain whether a company is solvent, or not.

With privately held companies it is not likely you will see a publicly available Balance Sheet. So with private companies, as most bitcoin and cryptocurrency companies are, you will ultimately not be capable of proving solvency, notwithstanding capital asset and liability measures, or transparency.

If you cannot see the whole picture, then you cannot verify its authenticity.