Bitcoin Forum

What if one day of the year, we got everyone to withdraw from the exchanges to see what exchanges are legit? and casinos.
I bet 80-90% of them would not have the btc to cover everyone.

no way
this scenario can bee seen if all bank users will try to withdraw all the cash they have in their accounts, but the BTC is on the blockchain, so you know every penny that is available
they can stop the withdraw, but cannot show fake numbers on their wallets, cause the blockchain cannot be faked

Trace Mayer has already come up with it, it is called: Proof of Keys, happens on the every 3rd of January


You can read more about it here:
https://www.tracemayer.net/
https://www.proofofkeys.com/

Or watch him:
https://www.youtube.com/watch?v=hquWmLCoCNI

Even if it happens like that exchanges would still have some arguments to legitimate their position. For example if exchange is holding big amount of cryptocurrency then it might be reasonable to hold some of those money in separate reserves due to some kind of security things.
I know nothing about cyber security but exchanges doesn't have to guarantee instant withdrawals at all times.

Some exchanges can actually not allow their users to withdraw all funds the same day and at once. I can still remember just before proof of keys day celebration, some exchanges disable withdrawals, while some went on periodic maintenance. All these were just form of excuses to not open their asses. This is why it's much more safer to leave little fund on exchange and have major portion on a secured private wallet.

Yeah,that would be really nice,but it's impossible to happen in the real world.
If it really happens,90% of the crypto casinos and exchange platforms will just block all withdrawals.
You know the saying "not your keys,not your coins". ;D

The balance on the blockchain can't be faked, but the balance displayed to users in their centralised exchange/web wallet/casino/faucet/etc accounts can absolutely be faked.  So unless you know the combined total of all the balances being displayed to all those users, you won't know if that figure matches the figures shown on the blockchain.

Then what happened to bitcoin that they withdrawn? Just heard it thing tbh and I found it crazy like I don't see any sense of doing it but of course it's definitely a win-win situation if people can really get those bitcoin.

Do we really need it? Like for me as long as the site have high traffic and reliable it will remain legit.

I think it's true, sometimes the stock exchange keeps a number of coins in the spare wallet. Like yesterday's binance when hacked, binance moved part of the exchange into a cold wallet. this is a way to secure if there is hacking.

see them calling #safu https://twitter.com/cz_binance/status/1125956811574484993

That's what they do every 3rd of January, the birthday of Bitcoin:

lets say we did that crazy thing you are suggesting here. what then?
we obviously will become sure that many exchanges are shadier than they looked but that still wouldn't change anything. people will have to continue to trade somewhere and as long as there is no better alternative, they have to accept the downsides of these shady ones.

Agree. you are right.

If I remember right, In the same day, Bitfinex stopped withdrawals and some other small exchanges (like hitbtc) also were having troubles with the withdrawals.

Nothing major happened that day (2019 was the first Proof of Keys event btw) but remember it wasn't a one-time activity, this event is going to happen every year. Most people, even in this topic,  weren't even aware of it when it was happening.

These stuff take time, over the years I believe It is going to develop into something bigger. It is called "the snowball effect"

When it becomes big enough, it'll be strong enough to destroy the exchanges which play the fractional reserve game.

Just watch Trace Mayer, he explains it very well.

edit:

Bitfinex Failed the Proof of Keys Test Says Trace Mayer
 (https://www.trustnodes.com/2019/01/04/bitfinex-failed-the-proof-of-keys-test-says-trace-mayer)

It would be easy for exchanges to hold traders funds so it's impossible for us to do it. I also don't think that will prove that a certain exchange is legit or not.
It will just ruin the normal transactions that we're doing.
There are other ways to know if an exchange is legit of not.

We can do that but the attempt wouldn't be successful because exchanges are in control of different transactions and they can't accomodate a huge number of transaction that you're trying to say. We will just ruin the flow and destroy most of exchanges through that so I guess that isn't a good idea.

It’s valid question even I think same most of the exchanges having digital information or just numbers backing bitcoin . Whatever trade or holdings having in exchange just numbers ther is no bitcoin backing this numbers . That’s how centralised exchanges are screwing crypto space.

I think high exchanges always have bitcoin available, at least the bitcoin we hold on their websites, but maybe some smaller exchanges not have all bitcoin available and maybe some of smaller exchange will close the business if they not get enough people to trade on.

I doubt that the critical mass necessary to truly stir those exchanges will ever participate in this event - the awareness will be low, people are just lazy/unmotivated, the fees for moving coins two times - one time widthrawing and putting them back the ext days. The idea sounds great in theory, but really hard to achieve in reality, especially if you keep in mind that a lot of people who own Bitcoin and altcoins aren't cypherpunks and are simply trying to make some money.

this is cool and interesting, has it had a big effect anywhere? never noticed anything about it  :-[

As far as we know it is not literally legit no exchange at all. He can discuss it in the future if there is full legit exchange. But if you're asking whether there is a certain amount of crypto investment, do you have any exchange? Nevertheless, exchange should hold both BTC and USD as a reserve. These reserves can be seen as insurance. Otherwise, both he and the investors can suffer.

They have all it take and they control everything as you rightly said not your wallet and not your coin the hold all it takes to take over you are at they Mercy. Most of the exchange and the gambling platform are just trusted for they reputation and that can also turn either way if the situations change we have seen exchange blocking a user account with founds in it and nothing happen even casino sites too do this.

I am not sure how accurate this statement is, if that is the case you could file a legal actions against the exchange and with regulations coming up around the world we might see some major change in these situation as they will understand the gravity of what they are doing, i bet all of the top exchanges will have the funds in reserve, since it is not a regulated market, the market will lower volumes might end up being a scam exchange if a situation like that arises.

As if those casinos and exchanges are just storing their funds in your browsers to their hot wallets, these legitimate operators of casinos and exchanges have their own settled rules to be followed by storing their Bitcoin from one single client to their safest and chosen secured wallets and with this it'll take time to cater a large withdrawal. Even legitimate banks does have withdrawing limit in a period of time though and so as with crypto exchanges and casinos, I'm not against it as it's for the safety measures to lessen the misconception of bad doings with cryptos.