The main concept that the Flow of Funds conveys is that Moneta Holdings is the only party that can distribute (create) Monetas or remove them from circulation (destroy them). This is the key process by which the solvency of the system is preserved. In the crypto-currency industry, evidence of solvency, reserves, real-time transparency and other similar phrases have grown and resonated. Exchange and wallet audits are very unreliable, in their current form. In the blockchain ecosystem, insolvency has taken place numerous times, either through hacks, mismanagement, or outright fraud.
Users need to be diligent in their choice of exchanges and vigilant in their use of exchanges. Even then the risks can not be fully eliminated by a savvy user. There are also exchange users, such as traders and companies, who must always maintain non-trivial fiat balances in exchanges. This is known in financial language as the' counterparty risk' of storing value with a third party.
The configuration of Moneta's Proof of Reserves is new because it simplifies the process of demonstrating that the total number of Monetas in circulation (liabilities) is always fully supported by the same amount of fiat currency held.
Each USDMoneta in circulation represents one US dollar held in our reserves in our configuration (i.e. a one-to-one ratio), which means that the system is fully reserved when the sum of all existing Monetas (at any point in time) is exactly equal to the USD balance held in our reserve. As Monetas reside on the blockchain, it is trivial to prove and account for Monetas at any given point in time.
Conversely, by publishing the bank balance and undergoing periodic audits by professionals, the corresponding total amount of any currency held in our reserves is demonstrated. This information will be available for users to view from Moneta website.
The Moneta wallet is a web wallet facing the consumer that operates on closed source code and centralized servers. Users can however, always secure Monetas by handling the private keys themselves or by managing any other wallets.
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