Community Consensus
The more Users validate their receipt and view their balance in the Merkle Tree, the higher confidence that the Proof of Solvency published is accurate. High confidence can be achieved very quickly if a minimum number (~5%) of users check that their balance is also included.
Merkle Tree solves several problems:
We publish a Merkle root so that all users know they are looking at the same Merkle tree
We encourage as many users as possible to check their balance is in the Merkle tree
An exchange would never leave someone out of the Proof because anyone could check their balance at any time. If a User found that their account balance was not included, it would be apparent right away.
The math is complex, but the confidence rate for a Merkle tree is exponential. At about 4% of users checking, the confidence is about 98%
Confidence comes from knowing that other users have also checked their balances and have not raised a complaint. With more users verifying their balance, the probability of accuracy in the Merkle Tree root hash increases. Not all users need to check for the confidence to be high. For large scale fraud in the tree to be detected, only a small percentage need to check to discover it.
