This January 3rd, many in the global Bitcoin community will take part in the annual Proof of Keys day. For those of you who are new to Bitcoin or haven’t heard of #ProofofKeys, this is your chance to get started. Learn about Proof of Keys, why it matters, and how you can be a part of it.
What is proof of keys?
Proof of Keys takes place on January 3rd, the anniversary of the Bitcoin Genesis Block — the first Bitcoin block ever to be mined. It was started by Trace Mayer, founder of the Bitcoin Knowledge podcast, as a way to celebrate the financial freedom that the creation of Bitcoin allows.
Trace Mayer was an influential bitcoin investor and enthusiast who helped many people to learn about bitcoin and the importance of securing your bitcoin private keys.
To take part, Mayer asked the Bitcoin community to remove their funds from exchanges on January 3rd as proof of their existence, and a recognition that your Bitcoin isn’t yours unless you’re holding the keys.
Not your keys, not your coins!
Bitcoin held on exchanges is not actually your bitcoin. Only if you hold the bitcoin private keys to your bitcoin, you can be the owner. For this reason, withdrawing your bitcoin from the exchange or broker is the only way to verify that you own those bitcoin.
So why does this matter? Taking your assets off of an exchange may sound like an inconvenience, but it’s an important act for two reasons:
You should always have a secure wallet ready to be used, you should build the habit of pulling your funds within your control. By withdrawing from central parties once per year, insolvency can be exposed. Proof of Keys is about testing central parties to prove that the Bitcoin they claim is there, is actually there. After all, exchange hacks are common. Exchanges create “honeypots” for hackers, and just as humans are flawed, neither are our defenses against hacking infallible. Stories like Mt. Gox and Quadriga happen every year, and nobody should wait for an exchange to be hacked to recognize that they don’t have full control of their digital assets.
Controlling your funds is in line with the principles that Bitcoin was founded upon. Bitcoin enables financial freedom, and the ability to take control of your assets like never before. By not holding your keys, you’re giving up the fundamental freedom that Bitcoin was designed to provide us.
Proof Of Keys: Withdraw Your Bitcoin From Exchanges
How can I take part? Taking part is easy. In the short-term, simply pull your funds from custodial exchanges for at least the entire day on January 3rd, 2019. If you want to put those funds back with a custodian later, that’s obviously your choice, but the action proves you really have the funds you think you have.
When you deposit the Bitcoin back on the exchange or broker, be aware of the risks. If you don’t control the keys to your bitcoin, you don’t actually own them, they are simply owed and promised to you by a third party. This is what proof of keys was initially created for. To help people realize what bitcoin at core, and why custodians are adding risk to your bitcoin holding.
Take Control of Your Bitcoin If you want full ownership of your funds, consider using a hardware wallet like ColdCard, KeyStone, KeepKey, Trezor or develop your own cold storage solution with secure hardware.
Proof of Keys goes back to the roots of Satoshi’s principles because Bitcoin was designed to be fully controlled by the users. Be your own bank because with bitcoin you finally can.