This integration comes amid growing concerns about the reserve security of other Bitcoin-wrapped tokens in the market. In particular, tokens such as Wrapped Bitcoin (WBTC) and Coinbase Wrapped BTC (cbBTC) are being closely examined by investors.

According to 21.co’s statement, Proof of Reserve technology has been integrated to secure reserves of 21BTC on Ethereum and Solana.

This technology provides cryptographic guarantees, verifying that new tokens are fully backed by reserves only, and protects against malicious minting attempts. This step was taken in response to increasing demands for transparency and security in the crypto world.

Proof of Reserve technology automatically audits financial data, including offchain reserve balances, and transmits this information to blockchain-based smart contracts in real time.

This transparency provides investors with assurance that their tokens are truly backed, minimizing the risks of fraud and abuse. Notably, this type of supervision was developed by learning from previous cases that occurred in crypto markets.

In particular, the decision of BitGo, the custodian of WBTC, to share control over the multi-signature wallet that manages WBTC’s reserves with the Hong Kong-based crypto exchange BiT Global, sparked controversy in the markets. This situation increased the distrust of some users in the ecosystem towards Justin Sun’s projects.

These debates about the reliability of Bitcoin-wrapped tokens have also resonated in the DeFi (Decentralized Finance) world. Decentralized finance platform Sky (formerly Maker) decided to remove WBTC from its platform following these developments.

On the other hand, Coinbase’s cbBTC continues to rapidly gain popularity. Launched on September 12, cbBTC quickly became the third-largest wrapped Bitcoin token. However, speculations have arisen regarding the reserve security of cbBTC.

In particular, asset manager BlackRock’s application to more quickly withdraw spot Bitcoin used in the iShares Bitcoin Trust exchange-traded fund has fueled these concerns. BlackRock works with Coinbase to provide custody of the Bitcoin held in its funds.

In a statement on September 22, Coinbase’s chief legal officer, Paul Grewal, denied rumors that the company would not cover losses due to a security breach regarding its cbBTC reserves.

Grewal stated that Coinbase will not be held responsible for such losses, but all steps have been taken within the framework of legal regulations.

Companies such as Coinbase and BlackRock, which are subject to strict auditing and reporting requirements by US regulators, regularly undergo third-party audits and take necessary precautions to ensure the safety of investors.

In response to increasing security demands in crypto markets, 21.co’s integration of Chainlink Proof of Reserve technology into 21BTC is considered an important step in the industry.

This development is an important move to increase investors’ trust in Bitcoin-wrapped tokens and aims to provide greater transparency and security in the crypto world.