Bitcoin Forum

On January 3rd each year, Bitcoin hodlers worldwide celebrate the genesis block anniversary in an event started by Trace Mayer known as "Proof of Keys".  This is the powerful and simple concept of moving your Bitcoins, for this one day of the year, from exchanges and other custodial holdings to a wallet or address that you personally control. This action is important as it lays claim to our monetary sovereignty while ensuring that custodial solutions cannot easily become insolvent or bad actors in our communities.

If you are unfamiliar with moving or storing Bitcoin, please take this opportunity to get support from the community  here and refresh your confidence in your ability and that of your custodian.

https://www.proofofkeys.com/

This event makes absolutely no sense. The only funds you should be storing with a third party or custodial wallet are funds which are actively being traded. If you are not actively trading, then why are you storing your bitcoin on an exchange or with a third party? And if you are going to go to the effort of setting up your own wallet and transferring your bitcoin out on January 3rd, why on Earth would you then transfer this bitcoin back to the third party on January 4th? If you are truly concerned that the third party you are using is not solvent, then by the time you try to withdraw on January 3rd along with hundreds or thousands of other users, then you may already be too late. Furthermore, companies know this is coming so could quite easily sell other assets to cover the date, whilst still not holding enough bitcoin the other 364 days of the year.

The whole thing is just backwards. If you want "proof of keys", then hold the keys yourself. Any other solution is incomplete.

Let's say if an exchange got hacked though without publicly announcing it, I don't think they'd have enough assets to cover the solvency(depending on how bad the hack is). While what you said makes sense, it's worth trying though.

That's pretty much one of the main end goals though as far as I know- to convince people to hold their funds on their own non-custodial wallets, even though it wasn't directly mentioned on the website.

This year proof of keys exposed some exchanges, there is an exchange that disabled withdrawals prior to proof of keys event and resumed withdrawals few days after the invent. I hope some exchanges don't fold up if people are to strictly comply. Not exchanges really have investors fund intact.

I don't think prof of keys is a bad event . It is an interesting one because it is a promotion against custodial wallets and exchanges


https://www.proofofkeys.com/
Of course removing coins from exchange January 3 and moving back to exchange in 4h is idiot, but that's not what the event is about

Withdrawing the funds on the 3rd and bringing it back on the 4th isn't THAT stupid per se, it's not stupid if you're a daytrader. Especially for those people who's main source of income is trading. But yes, checking an exchange's solvency isn't the only goal to be achieved here. It's to hopefully make people comfortable in holding their funds ont heir own wallets as it's pretty safe to assume that a huge majority of people still store non-trading funds on centralized exchanges.

I am actually also guilty of storing some of my cryptocurrencies in centralized exchanges but it is because the dollar equivalent of those assets are not really gargantuan. I am more inclined to believe that centralized exchanges are actually anathema to the very idea of Bitcoin and cryptocurrency which is decentralization. However, nothing can really be perfect and we have to accept that for now (and I am hoping this can be changing soon) centralized exchanges are offering better and convenient services and of course they know how to market their services to the targeted market.

Sir, I believe you are grossly underestimating the amount of people who have their holdings on an exchange for the mere fact that they have not yet learned  how to hold on a wallet or understand the implications of allowing a custodial to do it for them.
Less than 1 year ago several friends lost a substantial amount to the quadrigacx exit scam. Had they understood that exchanges were not actual banks but more of a wild west or had the support or understanding to transfer to a wallet, this wouldn't have happened.
You are correct with the entirety of the rest of your rant however this event nor the intention of my post is aimed at someone who already understands the nature of Bitcoin and how to Hodl. You will do more harm than good to make such comments in an environment with so much misunderstanding.   Please consider.  This is a positive event that makes sense on many levels.

I can only agree that this kind of idea does not make much sense, because the crypto community is not united enough to do something like this, and even if it were, crypto-exchanges would prevent this from happening by stopping withdraws or by increasing withdraw fees.

I agree with the message this initiative is sending, coins on exchanges are actually left at the mercy of those who hold them, and they can do whatever they want with them. We cannot completely devalue the value that crypto-exchanges have for the overall crypto system, but it's crazy to use them for anything but trading. There are many safer ways to keep our coins safe, but many do not understand it, or for some reason completely ignore this whole aspect of safety and risk.

Personally, I can't even participate in this event even if I want to, 99.99% of my coins are in hardware wallets, and just by holding them I profit more then if I do trading.

If Bitcoin were used by everyone in the way it was designed to be used, there would be no need for a 'Proof of Keys' event.  But because far too many people entrust custodial services with the bulk of their stash, this event is, sadly, quite necessary in terms of raising awareness about the pitfalls of "trusted" third parties.  

I think the idea is a good one anything that promotes the practice of hold your own keys is a worth while venture in my book,  I do however have some concerns that users who may not understand how to use wallets may get into trouble either downloading the wrong wallet or even compromising there new wallet some how in the process.

I think if this was to go ahead it should focus on the education behind how to use and setup a wallet in a safe manner and how to back up that wallet to ensure coins remain safe.

As said already a lot of people are put off by installing there own wallet dew to may factors the easier we can make it for new users to understand how to do this and how to make secure backup's of funds is something I feel is more important at this time.

I love the concept but I feel users who feel un-easy about installing wallets could still run into trouble trying this out with no guide.

during this event, many exchanges are disabling the withdrawal
in this event, we can see which exchange has back up bitcoin
those who disable withdrawal don't have enough bitcoin for their user to withdraw
so if one of you is using one of those exchange its better not to put a large amount of bitcoin on it or stay away from the exchange

Almost all of the bitcoin I have are on exchanges for trading or are invested somewhere. I know it's better to be safe and hold the ownership of the coins yourself, but the larger the liquidity I maintain larger would be my profit.
3rd January is still to come and we would know which of the exchanges hot wallet would go dry.

Which is why we should be teaching them to how and why to take control of their own private keys immediately and permanently, and not just for a single day a year. The page you linked even states there will be a return to "business as usual" on the 4th of January. Business as usual meaning giving up control of your assets to a faceless third party? No thanks.

This event should be less about testing the solvency of an exchange or third party and more about educating people to hold their own keys.

Any exchange which does this is a scam.

Somehow these 2 statements contradict themselves. (Maybe not exactly "contradict", but I guess you'll understand what I mean.)
Yes, people should keep minimal funds on custodian wallets. But the size of the known custodian wallets shows clearly that this doesn't happen.

If really big number of people would withdraw it would be great. Not because of the extra hassle they'd create to custodians/exchanges, no. Because quite a big number of people will not deposit back, just because they don't need to, achieving exactly what's intended: having their coins under their keys.

Not if you look at the page that OP has linked to. For example:


If you are a "HODLer" and not actively trading, then your coins shouldn't be on a exchange to begin with. Having an event to stress test exchanges for a single day and then going back to "business as usual" (which they obviously define as leaving your coins under the control of someone else) makes no sense. None of this is necessary if you aren't actively trading.

Have an event called "Be your own bank" instead and run an education campaign to tell people how and why they should hold their own keys. Make it about the users - protecting their assets, security, privacy, etc. - and not about testing exchanges, most of which we already know are shady and shouldn't be trusted.

I agree, this event is useless. First everyone is not doing it, which defeats its purpose. Second, its only once a year, it isn't incredibly difficult for online agents playing fractional reserve to anticipate the day and prepare for it. Third, all this does is provoke an unwanted spike in traffic. This is the day you can expect your transactions to last a day rather than an hour...

I agree that Jan 3 should be celebrated, but as Bitcoin day rather than this pointless exercise in futility.

Incidentally, none of the exchanges/sites that cheated on users, actually failed on Jan 3.

So if I'm understanding this properly, we are asking everyone to give even more money to exchanges on Jan 3? If everyone moved their funds out, let's say 10k people per exchange at just 10k satoshi withdrawal fees (and some are even more), do you realize that means we are giving the exchange FREE 1 BTC?

Only the rich will do it.

You got me, I didn't read that  :)   Indeed, the writing is ... newbish?! Indeed, in the light of that, you are right.
It may still worth mentioning that some may simply buy bitcoin and not withdraw, for various reasons. In that case (which I don't know how many bitcoin add up) the page may be correct.



This would be a great idea if many people would not "know better" and would avoid this exactly because it's "educational".
I really don't know which of the two direction would actually get anywhere. Maybe .. both?



Maybe a Bitcoin day where we try to open people's eyes that storing their funds in the exchanges is bad for everybody, including them.

Okay, I'm on board with the spirit of the re-brand, but not so much the names so far.  "Bitcoin Day" sounds far too generic and not particularly informative.  "Be your own bank" is good, but it sounds like more of a tagline than a name.  We want to convey the importance of not relying on others to store your BTC.  What name would sum that up best?

I store a tiny amount of coins on an exchange for when I need to quickly tap into my BTC stash, simply because I don't want to wait for tx confirmations whenever I need to do it (and don't pay fees and don't launch my cold storage setup), and I will likely skip participating in this flash mob, because I don't see any reason to do so. I trust that my exchange is not embezzling user's funds, and if I'm wrong, I will only lose the amount I can easily afford to lose.

Lol what. I don't think exchanges even monetize the withdrawal fees. And if they actually did monetize withdrawal fees, it wouldn't even be a significant amount for them in the slightly. 1 BTC is pretty much almost nothing for your typical exchange.

Well, fees are their main source of income for them and can be divided into deposit, withdrawal and trading fees. In most crypto exchanges withdraw fee is 50 000 satoshis, and most of that coins stay in their pockets since actual blockchain fees (BTC) are at least 10 times less than that amount and they use bulk transactions. Users who are promoting yobit/cryptotalk pay 120 000 satoshis withdraw fee, so I would say fees are very important for them.

We can conclude that one of the reasons why users do not withdraw their coins more often from exchanges is because of fees. Imagine that you are trading and every day moving your coins from an exchange, 30x50 000 satoshis = 0.015 BTC or even more in case of some exchanges.

If you are a day trader. Its absolutely a burden to your asset. Imagine, everytime you have an execution wether it is a buy or sell a coin, you withdraw. Probably, you are lose. That is why some of traders stock their coins at exchange. Even there is a chance that the exchange they stock will be intercepted by hacker.
Exchanges have a lot of fees and I think it is not worthful to join such an activity like OP talk about. I don't think it is worth profitable for using my time and efforts.

It's definitely mostly trading fees though, probably more than 95%. And my guess is that the withdrawal fees are higher than it should be for user experience reasons- for the network fees, so transactions would be confirmed faster. And probably also to make people leave funds on exchanges(hence increasing the chances of them making trades maybe?).

That's a reasonable conclusion, but let's also not forget that some people aren't willing to write down 12-24 words on a piece of paper and take the security responsibility to themselves.

I think for now I'm not yet ready to take that proof of keys. I believe I'm still satisfied with my wallet. Being or having a third party to hold my bitcoin is somehow a great deal. Its quite interesting to try if what is really the best way to gain more.

Unless you're leaving your funds with a lending platform or unless you actively trade, how is it a "great deal" though? You literally gain nothing besides convenience for leaving funds on a third party. You might think it's great, well, until that third party gets hacked.

People are not ready to be their own bank, and even if they wanted to, most are not capable of it. To be perfectly honest, a good portion of those who buy/sell or just store crypto have big problems with the basics of IT, and the importance of private keys for them is something like science fiction. All this is the result of a long-standing system that promotes as little of one's own responsibility and the transfer of that responsibility to others, of course, with a price or a violation of privacy.

If you open a bank account, all you need to access your funds is a plastic card (ATM) and a PIN, or your ID if you need something in the bank. If we compare this type of service with the usage of cryptocurrency it is evident why a large number of users continue to use crypto exchanges as normal banks. Many live in the belief that this is the same type of service, which is partially true - until the exchange is hacked, or the owner takes all the private keys to the grave.

I'm supporting this effort (officially), I don't think the sentiment/intent will change much or cause exchanges to fail due to lack of widespread support etc etc. It's clearly about educating newer investors into cryptocurrency about owning their own assets and the dangers of allowing a third party to own it. I know it took a hile for me to learn to begin with when there was already so much to learn about Bitcoin that appeared more important (or more interesting), so it's likely some people learn will learn about this around this time and it will help them about one day. It's irrelevant that my Bitcoin remains owned by me, not just on January 3rd.

Education is exactly what this is about. Yes, you nailed it.
Bitcoin proposes a challenging conscientiousness shift to traditional finance and personal responsibility in holding your own asset (especially digital) is a new concept that requires exercise to feel comfortable with.

So how can we check how many does this?

You can't but why do you think it should be relevant?
It's not dumb. Plenty of people have simply not yet learned how to hold coins in their own wallet simply because banks are all they have ever known. So to the average person who keeps hearing about this Bitcoin thing and wants to invest a little, Coinbase looks like a bank, can you blame them?  Proof of keys will challenge that concept.

thats the whole point of the event..

its like independance day.. most people kinda know about independance but each year there is a default big event as a classical reminder.
it saves all the drama of having to remind people all the time. and gets more people aware that may not have been aware before. then after the event more people think more carefully about how to hold it.

its like other events. you should respect your mother all year but have a big reminder event called mothers day. many family renew-refresh their respect for thir parents on father/mothers day. yea some slip up and be disrespectful other times of the year but they kind of remember again on the event. which reduces bad experiences the rest of the year compared to never having such an event

its like a training day. a masterclass. a significant event that can be talked about and learned from the rest of the year because of its significance at the event.

without such, many fools will have just trusted custodians all the time and thought it was never a problem. this way they can learn

What's being questioned is whether it actually achieves that, though.  Some people are presenting this Proof of Keys event as "keep all your coins on an exchange for 364 days a year and just withdraw them on this one particular day to make sure the exchange is still solvent".  No one is learning anything if they're only doing that.  They need to keep the bulk of their stash in their own personal wallet and only have what they're actively trading on the exchange.

The entire point of this event is to see if we can achieve this. Ultimately we are talking about adoption and best/safe practices, no?  I'd argue that proof of keys is a positive effort that does more for adoption than doing nothing or worse, making nonsensical arguments that its designed for the single purpose of keeping exchanges solvent. Don't get me wrong, keeping honest exchanges honest is great right?
I simply don't see anyone taking time to learn how to hold their own BTC in their own wallet with their own keys, with the understanding that its superior to being held in exchanges simply to transfer it back the next day.
Traders will be the only ones to do this right?
Sorry, IMO anyone with that convoluted argument is doing it to hear themselves talk or in an effort to protect their interest in an exchange.

Happy Proof of Keys day everyone! Don't forget to take ownership of your Bitcoin today  ;)

I consider the single days of abstention to something, one-off per year, totally useless. To have real effects one should always behave like this, in every field, to be consistent. Relatively to the crypto world, we urgently need true and pure DEX!!!

Canadians are leading the way with non-custodial solutions. Only great things to say about https://bullbitcoin.com/
Take note, we need more like this!

I completely agree, hence I think we should try our best to educate the masses, especially the younger demographic. And yes, A LOT of people will learn basic internet/computer security in the hard way, a.k.a. the "Darwinian" way(by getting their funds stolen). This is why I tend to think that unfortunately, it looks like decentralized cryptocurrencies like bitcoin will be for the millennial generation and onwards; as the percentage of computer-illiterate baby boomers and GenX-ers are just too much.

I don't see how it's a "convoluted argument".  Look at the way in which the event is reported in certain parts of the media (bold emphasis mine):


"For the duration of the day".  And then presumably go back to business as usual and forget about it for another year.  I mean, I don't see any other way to interpret that.  

In my view, I think they could be doing a much better job of explaining exactly what they mean on the https://www.proofofkeys.com/ homepage, because the intended message is clearly getting lost somewhere along the way.  I'm not saying it's a misguided effort on their part, but it should be abundantly clear that checking for exchange insolvency is a secondary objective and not the main purpose of the event.

Yeap. The proof of keys website really does lacks a lot of information. If you want to get a sort of more "in depth" information about the proof of keys movement though, I suggest listening to those What Bitcoin Did Podcast episodes whereas Peter McCormack(the podcast host) talks with Trace Mayer(the person who started the movement). Trace Mayer goes more in depth about the movement that isn't explained or mentioned on the website, as the website does need a lot more work.

I'm reading on that web site "Login" and "Signup". I don't know how permissionless it can be... Can you explain me this doubt, please?

ok. so proof of keys only started last year. so it was not truly an annual thing as this year is only the second time the event has occured.

and looking at how the 'bitcoin richlist' has not really changed over the last few days.. just shows that not many actually participated in it.

infact since last year there are more coins hoarded in addresses of 1000+ meaning more people are putting coins into custodial wallets than before this time last year

to me thats now more of a 'proof of failed campaign'

I was not familiar with this event. It is a little cumbersome to move Bitcoin for just one day. I have some in a private wallet and some on an exchange but only because it’s easier to hold it there right now.

Firstly, I understand the importance of having decentralized exchanges DEX and permission-less entry points. The fact is we are not there quite yet and it's neither easy nor convenient for the majority to get involved with.

This is not a permission-less exchange, in fact its only available for Canadians at the moment and is fully KYC and AML compliant. What it does do is forces buyers to provide their own BTC address for each purchase eliminating exchange custodial risks and encouraging holders to claim responsibility.  I also like that they are Bitcoin ONLY, also, all coins are freshly coin-joined and their spread is not gouging. They offer a convenient payment service called "bylls" that pays any Canadian financial institution directly with BTC.  Further, this platform does not support trading or even limit orders taking away the urge to "gamble". Account Funding via E-transfer during business hours is near immediate allowing one to effectively buy the dip. Buyers here are going long term, have conviction and are doing it for the right reasons.  
IMO its platforms like this that will succeed and pave the way forward toward adoption while fully satisfying government regulations.
By that it is not permission-less however I fully support their efforts in on-boarding Canadians in a very transparent, moral, and largely trust-less way congruent with BTC best practices while creating a role model business and healthy atmosphere for the Bitcoin space in general.

Creator, Francis Pouliot from satoshi portal and co-creator Dave Bradley @bitcoinbrains

You don't need to move your bitcoin in your private wallet since you have total control over it. This practice is more on your crypto's is sitting on an exchange or any third party. But it is not mandatory though, if you don't want to involved yourself moving funds around because of the hassle then don't do it, simply as that.