For the past 3 years, the arrival of Bitcoin's birthday on January 3rd has been an invitation for Bitcoiners and the crypto community in general to test the vision and purpose with which Satoshi Nakamoto created Bitcoin.
If you are new to the world of Bitcoin and cryptocurrencies, Surely you have not heard of proof of keysWell, “Proof of Keys” is an event proposed by Trace Mayer, a well-known Bitcoin enthusiast, trader and investor, who in December 2018 put forward a rather interesting proposal for the entire crypto community, and which confirms every year the freedom, sovereignty and decentralization that Bitcoin offers us. The proposal is simple; it involves withdrawing, with each Bitcoin birthday, the bitcoins deposited within the exchanges and cryptocurrency exchanges to live up to the motto of the entire Bitcoin system and the crypto community: “Not your keys; “not your Bitcoin”“not your keys, not your bitcoins.”
Thus, every January 3, bitcoiners, holders and users of Bitcoin, who keep their cryptocurrencies with custodian services or trusted third parties, are invited to regain control over their keys, or naileprivate s Bitcoin, removing them from those services and moving them to accounts or addresses that each of them controls for themselves. Proof of Keys is an informal celebration that aims to remind us of the fundamental purpose for which Bitcoin was born: to be the owners of our own money, without the control or intervention of banks or financial institutions.
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A “bank run” on Bitcoin
“Anyone who doesn’t want you to have your own private keys is your monetary enemy.”
Mayer's proposal is comparable to what a bank run means, where clients and users of an entity go and massively withdraw their deposits, funds and savings from banks. However, in Bitcoin, what is sought is for each user to understand the true meaning of this cryptocurrency, and understand that they can have absolute control over their own money, without the need for an entity as an intermediary.
Bitcoin is a decentralized financial system born to give us back true freedom and independence over our finances; by allowing us to receive, send, process, exchange and maintain our own cryptocurrencies without a trusted third party.
Taking back control over our money
When we keep our bitcoins inside an exchange, we do not control our money, the exchange does, because it is the one who manages the private keys to the coins. Thus, the motto “Not your keys, not your bitcoins” This applies literally to Bitcoin. Because if you don't control your own private keys, then you don't really own those bitcoins or that money; something similar to what happens with banks, which control our funds and can use them as they wish, including blocking them, confiscating them and preventing us from withdrawing them when we need to.
Furthermore, as Mayer explained in an interview prior to the first day of Proof of Keys in 2019, there are many potential consequences of holding your bitcoins with a trusted third party, such as a higher risk of losing your bitcoins than if you kept them in your own custody. It should not be forgotten that cryptocurrency exchanges are more likely to fall victim to major hacks, where they can lose much, or all, of the funds stored, and history is there to remind us of this possibility. Mt.Gox, one of the largest and most important exchanges in the world, suffered a hack in 2014 in which lost more than 850.000 bitcoins, currently valued at around $26.477,5 billion, according to the price of Bitcoin at the time of this publication. Nearly 20 thousand users were affected by the hack of this platform, and to date the exchange has extended, many times, the refunds of the cryptocurrencies to the thousands of affected.
Another recent example of the risks of keeping our funds in third-party custody is the case of OKEx, which paralyzed its services for more than 5 weeks after one of the exchange's signatories was absent due to police matters. The company reported that one of its executives was collaborating in an investigation with the authorities, so it was forced to close the cryptocurrency trading and exchange operations on its platform, leaving thousands of users without access to their funds. The situation, which had no expected end date, lasted for 5 weeks, causing great concern, uncertainty and losses among its clients and users.
Defend your right to privacy
On the other hand, another major consequence of keeping our funds within exchanges and custody services is the lack of privacy, since most of these services request users' personal data, keep a detailed record of financial movements and more data that can end up in the wrong hands.
In addition, there is also the recent case of the Treasury Department and FinCEN, which are imposing new regulations for all exchanges to comply with new KYC (Know Your Customer) requirements, and report all transactions exceeding $3.000 USD in value to government agencies. Therefore, any transaction exceeding this threshold will end up in the hands of the Treasury along with the personal data of the person who made the transaction.
With these and many other arguments, Mayer made the decision to encourage the crypto community to defend its right to privacy and sovereignty, and the most basic way to exercise it is by maintaining custody of our own money, although this action can be complicated for new Bitcoin users.
If you would like to maintain custody of your own bitcoins, please visit our Bit2Me Academy article How can bitcoins and other cryptocurrencies be stored?
Continue reading: October 15: The deadline for MtGox to return 150 thousand BTC to its creditors
