Crypto purists and blockchain aficionados are growing increasingly concerned that the original premise of Bitcoin as a decentralized currency has gotten lost in the shuffle of transitory platforms, hard forks, market volatility, increased regulatory attention, and the like.
This led to the formation of an industry-encompassing idea that experts are referring to as a “cultural tradition.” Scheduled for today, Jan 3, 2019, which happens to be the 10th anniversary of the Bitcoin Genesis Block, this tradition has been named “Proof of Keys Day,” and is set to become an annual event.
Crypto exchanges have resigned themselves to the plan. Some are taking a positive approach, probably because they know that ‘if you can’t beat them, join them.’
Coinbase CTO Balaji S. Srinivasan took the step of announcing via Twitter exactly how to help celebrate Bitcoin’s birthday and establish personal monetary sovereignty.
Tomorrow is the 10th anniversary of Bitcoin's Genesis Block. On that day, many will be doing #ProofOfKeys, which means sending your crypto from an exchange to a local wallet (and back, if you want). Learning how to do this will teach you about private keys & monetary sovereignty.
— Balaji S. Srinivasan [Jan/3 🔑] (@balajis) January 2, 2019
The Establishment of Freedom
The premise behind Proof of Keys is to assert independence from centralized exchanges and third-party holding methodologies. The goal is to prove and maintain financial solvency in the crypto space and for each holder to assert control over their own cryptocurrency through the use of private keys.
Trace Mayer, a top blockchain and Bitcoin expert, is spearheading the entire movement. A heavy influencer and supporter of decentralized currency as a means of individual freedom and financial autonomy, Mayer also fervently supports HODLing, the practice of purchasing and keeping one’s crypto assets in the face of market chaos and volatility, particularly when prices are falling.This year, of course, HODLers have engaged in a prolonged exercise in personal fortitude. Click To Tweet
Another obvious benefit of cryptocurrency is privacy. Privacy is accomplished via the autonomy, immutability, and lack of a centralized governing body the cryptocurrency concept offers. Experts such as Mayer express concern over the entire exchange concept. In their minds, exchanges are a necessary part of market functionality. Exchanges shrewdly identified an additional need within the market, especially as larger numbers of people invest in Bitcoin and crypto. Ironically, exchanges began to exist as not only a means to conduct transactions, but also as a primary crypto storage tool.
An Insightful Irony
The fact that this irony is even possible, coming from a decentralized currency premise, is simply a function of modern society and of the reality that, for decades — even centuries — no-one who has taken advantage of the perks of modern banking has truly maintained control of their financial assets. Bitcoin was created as a result of the sad reality that the current banking system is broken and essentially unfixable.
Therefore, crypto’s movement back toward a “central” holding structure of any sort is disconcerting for blockchain technology proponents. It represents a step back into a dangerous place, one that Satoshi and other early cryptocurrency innovators certainly did not have in mind when Bitcoin was launched on Jan 3, 2009.
Much of the problem lies in the fact that many newer crypto investors, especially those lured in by astronomical price leaps and the promise of gaining millions in nearly lottery-style ways, do not have a solid grasp of the original premise of Bitcoin. Without decentralization, Bitcoin is basically nothing more than a shaky investment tool, if that. It is the promise of privacy, an immutable, decentralized distributed blockchain ledger, and a secure, autonomous money platform, that is the power of Bitcoin.
So many investors do not understand the difference between private key storage and public exchange storage. There is concern that private keys will be lost, misplaced, destroyed, or otherwise rendered useless. This, of course, would mean the loss of any tokens held in the private key storage.
Mayer and other supporters of the Jan 3 event hope to raise awareness and educate without this becoming the reality. Unfortunately, the odds of that happening are slim. New crypto investors are a population accustomed to banks and other centralized authorities inserting themselves into every aspect of money management.
Coinbase CTO Balaji. S. Srinivasan’s tweet represents a healthy and reasonable response to the Proof of Keys event. This approach is most likely going to earn industry-wide kudos for Coinbase, especially in light of how other exchanges are preparing for Proof of Keys day. HitBTC, for example, has chosen to freeze all customer accounts in preparation for the first annual Proof of Keys event.
However, even as Srinivasan is calling for Proof of Keys day actions, the general mood of the crypto community is that Coinbase is not prepared for the event. A large number of transactions and the resultant emptying of holdings could effectively log jam the exchange.
Whether Coinbase and other exchanges are prepared or not, the very nature of Bitcoin would suggest that such a day is a worthwhile endeavor. Satoshi would be proud.
Think Proof of Keys day is a good idea? Or is it a clutter to the already beleaguered system? Let us know in the comments below!
Images courtesy of Shutterstock, Twitter.