Bitcoin’s “Proof of Keys” looks to push back on the financialization of BTC
January 3 is her, and bitcoiners are celebrating “Proof of Keys” to cement the unique attributes of Bitcoin. The goal of the “Proof of Keys” initiative is to push back on the financialization of Bitcoin. The only way to ensure you own your Bitcoins is by taking them into your custody.
Strengthening Bitcoin resilience over time
The initiative was established on January 3, 2019, and occurs every year. During the event, Bitcoiners withdraw all their bitcoin from third-party services and exchanges just for proof they are there, on the blockchain, or otherwise, it did not happen.
With the withdrawals happening simultaneously, it must sound like a “bank run” whereby users rush to get deposits out of insolvency fear. However, with this happening regularly, institutions are less likely to fall suddenly without warning. The reason is the knowledge that bitcoiners do not take fractional reserve banking and false promises lightly, holding these third parties in check and strengthening the Bitcoin ecosystem.
Transparency issues are crippling crypto exchanges
If you are a crypto enthusiast, you probably have heard of the FTX saga and other exchanges that have gone down with it over time.
According to Josh Fraser, cofounder of Origin Protocol, FTX was not always what it appeared to be. It failed to keep its customers’ promises, such as not lending money and keeping assets safe for its customers.
Although investing in crypto is generally safe, it’s important to distinguish between investing in it and keeping your assets in a brokerage or exchange. There are often issues with transparency with exchanges and brokerages. They entail trusting that the person handling your assets will do so responsibly.
Cory Klippsten, the chief executive officer of Swan Bitcoin, stated that Bitcoin owners should be fine if they keep their assets out of exchanges such as FTX, which operates as a “crypto-casino gambling website.”
Klippsten added that an exchange is a security risk, and some are more trustworthy than others. He advises Bitcoin owners to take control of their digital assets rather than putting them in an exchange.
Securing Bitcoin is crucial, but self-custody also carries risks
Due to the claims by one of Bitcoin’s original developers that a hacker stole his wallet balance, the community needs help regarding how people can secure their Bitcoin off exchanges.
Luke Dashjr stated in a recent thread that his private key, part of an encryption program, was allegedly stolen by some attackers. The community is worried that the developer, known for being very security-conscious, could be compromised. That could prevent normal people from adopting or securing Bitcoin.
In response to Dashjr’s Twitter thread, Changpeng Zhao, the CEO of Binance, said that the company would help the developer by monitoring his assets and freezing his Bitcoin if deposited into the exchange. In response to a question about self-custody on November 14, Zhao stated that people should only do it with small amounts of money as mistakes could get costly.
