Whatever Happened to Proof of Keys?

[Killrbit]

For anyone that Doesn't know what Proof of Keys is it was an Idea that began in 2018 by Trace Mayer on twitter that involved the Bitcoin community as a whole retaking control of their Funds if only for a day. Most people leave a lot of their Bitcoin on centralized exchanges which are often prone to hacks, exit scams, insolvency and as of today are increasingly enforcing a creeping KYC on their users.

https://twitter.com/TraceMayer/status/1071870548421066753


Proof Of keys was meant as way for the Bitcoin community of retaking and exercising control of their bitcoins ( not your keys not your Coins) by simultaneously withdrawing all their Bitcoins every January 3rd of the year from centralized exchanges, third-party bitcoin services and Custodial wallet providers and moving it to private wallets controlled by themselves.

This was meant as a way of exposing exchanges that were perhaps running fractional reserves, faking trading Volumes and/or generally being disingenuous with their users. This would also highlight the true sovereignty that bitcoin provides to holders.

However 2 years on the movement doesn't seem to have gained as much traction as originally hoped (maybe somewhat forgotten), with community participation being somewhat limited based on, on chain data which did not suggest any spike in transactions on or leading up to January 3rd in both 2019 and 2020.

And yet even with this limited participation many exchanges were reported to have delayed/frozen withdrawals or haltied trading for supposed maintenance either a few days or a week leading up to the proof of keys event including Hitbtc, Robinhood, Poloniex, Qudriga ( Exit scammed later )

Given the limited participation and how critical this can be as a regular way of keeping exchanges in check what do you think can be done to spread greater Awareness about Proof Of keys and ensure greater community participation (perhaps limited participation was because so many people still dont know how to use private wallets safely and simply use exchanges for storing all of their cryptos)when the Next proof of keys event takes place in 2021.

What is Proof of Keys

https://www.proofofkeys.com/

https://academy.binance.com/security/the-ultimate-guide-to-proof-of-keys-day

Other Sources and Useful Links

https://www.coindesk.com/proof-of-keys-bitcoin-bank-run
https://www.coinspeaker.com/proof-of-keys-exchanges/
https://news.bitcoin.com/proof-of-keys-day-returns-on-bitcoins-11th-birthday/
https://icoexaminer.com/ico-news/cryptos-day-for-proof-of-keys/
https://bitcoinist.com/not-your-keys-not-your-coins-what-proof-of-keys-day-means-in-2020/

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[o_e_l_e_o]

It gained no traction because it was more-or-less pointless.

Withdrawing all your coins from an exchange for one day, and then depositing them back the next day and thinking that that somehow makes them "safer" for the next 364 days is meaningless.

Only if you got a significant proportion of users (>50%) to engage in it would it be able to reveal exchanges which were insolvent or faking volumes, and that was never going to happen. If you can't get through to a newbie why leaving their coins on an exchange permanently is a terrible idea, then there is no way you are going to be able to convince them to take part in "proof of keys".

And as you say, even although some exchanges did delay or freeze withdrawals in the lead up to it, it made not a blind bit of difference to those exchanges. Instead of everyone saying "Hey, this exchange is probably insolvent" (Quadriga) like they should have done, they all just kept on using it and lost a combined millions of dollars worth of bitcoin a few months later.

Much better to just teach everyone to take their coins off the damned exchange.

[btc_angela]

For me it seems that this is being used to target some exchanges though, of course we can always retake and exercise our control every time we want and I don't think we need this "proof of keys' day. In relation to that, it has also been discussed,

Proof of Keys is coming. One exchange is going to fail. Stay safe, take action.
Tomorrow is "Proof of Keys Day".
Proof of Keys / Proof of Trust / Bitcoin Independence Day.
Annual Proof of Keys January 3rd.

[hd49728]

Proof Of keys was meant as way for the Bitcoin community of retaking and exercising control of their bitcoins ( not your keys not your Coins) by simultaneously withdrawing all their Bitcoins every January 3rd of the year from centralized exchanges, third-party bitcoin services and Custodial wallet providers and moving it to private wallets controlled by themselves.

Why should people use non-custodial wallets to store all of their bitcoin?
Why should people prove their ownership on Jan 3rd each year and not on other days?

The activities can only help third party companies to have more proofs on how many bitcoin addresses are still active and they can run analysis on how many bitcoin potentially was lost (from UTXO data).

https://hodlwave.com/

[vapourminer]

i keep some parked on exchanges for whatever. and while it would be annoying, i could afford to lose them if the exchange tanked.

but on proof of keys day i do try to have most all of that  off the exchange in my own wallet for the 3rd.

[Killrbit]

Proof Of keys was meant as way for the Bitcoin community of retaking and exercising control of their bitcoins ( not your keys not your Coins) by simultaneously withdrawing all their Bitcoins every January 3rd of the year from centralized exchanges, third-party bitcoin services and Custodial wallet providers and moving it to private wallets controlled by themselves.

Why should people use non-custodial wallets to store all of their bitcoin?
Why should people prove their ownership on Jan 3rd each year and not on other days?

The activities can only help third party companies to have more proofs on how many bitcoin addresses are still active and they can run analysis on how many bitcoin potentially was lost (from UTXO data).

https://hodlwave.com/

No one's suggesting that people should use custodial wallets, its always best to use to use a wallet that you control directly especially when you are holding from a long term perspective.

But the fact is most people do tend to have at least some amount of money on exchanges which they use for trading.
And most newer people  always tend to use a centralized ( coinbase for instance) exchange for their first fiat to crypto purchases either for ease of use or because many dont take the time to understand how to use a private wallet, and these people often then never end up withdrawing their money to private wallets.

These were who the primary target was for the proof of keys event( apart from testing the exchanges ), if nothing else it would help people learn how to use private wallets.

[Killrbit]

Only if you got a significant proportion of users (>50%) to engage in it would it be able to reveal exchanges which were insolvent or faking volumes, and that was never going to happen. If you can't get through to a newbie why leaving their coins on an exchange permanently is a terrible idea, then there is no way you are going to be able to convince them to take part in "proof of keys".

Yea this was exactly my point there needs to be greater awareness about it in order for proof of keys to be effective and actually act as test for exchanges. Personally I think even if 30% of the community were to withdraw their money simultaneously it would be more than enough for cracks to start showing up with regard to exchanges where solvency was an issue. ( the conundrum of course however is that if the exchange was insolvent they would naturally use an excuse to deny any such mass withdrawal as was the case with hitbtc and quadriga for instance. But even then at the very least this would mean prevention of further people depositing money into an exposed exchange. Much better to expose the scam then let it continue to dupe more investors.)

Quadriga ofcourse is not a great example here since despite being exposed a lot of people continued to deposit more money into It, but like you said some people will never learn. ( similar situation happened with bitkonect with people giving them money upto a day before they went belly up)



 

Much better to just teach everyone to take their coins off the damned exchange.

Yea always better to keep money of exchanges but i think the reason most newbies end up leaving their money on exchanges permanently is because it is for many the first fiat to crypto gateway and many  subsequently never end up taking the time to learn how to use a private wallet.

[hatshepsut93]

1. Not everyone was aware of it. Not all investors are checking twitter, reddit or this forum every single day.

2. Most people just don't care, so out of those who are aware of it, only a small percentage will participate.

3. It actually costs money to participate in proof of keys, exchanges tend to have pretty big Bitcoin withdrawal fees, and since you probably plan to put the money back, you'll then have to pay the network fee too.

[joniboini]

but like you said some people will never learn. ( similar situation happened with bitkonect with people giving them money upto a day before they went belly up)

I think this is the point. Some people are never gonna learn the lesson unless they got rekt themselves. They also easily believes the "insurance fund" some exchanges are claiming here and there, so that's that. I think it will come to the point where everyone learn it the hard way, or DEX is good enough to use so they won't use CEX ever again. I believe the former is more likely to happen though.

[YuginKadoya]

I think the Proof of keys does have a point in taking good care of your bitcoin that there are many too lazy in taking engagement with enabling 2nd authenticator security, I think they got a point in taking good care of your own money by doing a consensus yourself, But the third party is providing you with verification and telling you that their services are great and have authenticity, but I guess we all need trust in everything you do in every exchange you place your money just like trusting the ecosystem of Bitcoin that is why you have invested the first place, but trust is not a safety issue anymore and I think we need powerin doing it your self in securing your Bitcoin.

[witcher_sense]

Ownership of keys doesn't need to be proved unless you are signing a message or broadcasting a transaction. Moreover, for most bitcoin hodlers it is considered absolutely normal to never disclose any ownership over specific UTXOs for privacy reasons. Not your keys, not your bitcoins. My keys, not your business, sorry. I don't have to prove anything as long as I keep my private keys secret. I don't have to prove that I am hiding something.

Proof of Stupidity (PoS) is a more appropriate name for this movement. They are trying to prove something while paying high fees to exchanges to withdraw "their" coins. And then, they prove they can't control the keys for long and deposit bitcoins back. I wonder why rational bitcoiners ignore that movement.

[Killrbit]

Proof of Stupidity (PoS) is a more appropriate name for this movement. They are trying to prove something while paying high fees to exchanges to withdraw "their" coins. And then, they prove they can't control the keys for long and deposit bitcoins back. I wonder why rational bitcoiners ignore that movement.

I hadn't considered the fees aspect of it, so i can understand why something like this would not really be viable if transaction fees are running high or in the case of people who have smaller balances. Also given that exchanges often charge higher then the actual network fees i can see why a lot of people would be put off participating in this.

[o_e_l_e_o]

But even then at the very least this would mean prevention of further people depositing money into an exposed exchange.

I'm not convinced it would. The crypto community on a whole mirrors the general population on the whole, and there are far too many naive newbies or just idiots who do no due diligence around. "A person is smart. People are dumb."

Binance hacked for $40 million and hacked for users' KYC data - continues to grow as one of the biggest exchanges in the world
Coinbase hand over details directly to the IRS and US government, sell users' private data to third parties, develop software for tracking users and rent it out to the FBI/IRS/DEA, insider trade - continues to grow as one of the biggest exchanges in the world
Huobi are running a fractional reserve and using customers' deposits to invest in high risk products for their own gain - continues to grow as one of the biggest exchanges in the world
Bitfinex printed $800 billion Tether out of thin air which they loaned to themselves because they are insolvent - continues to grow... you get the idea

Any exchange caught out by proof of keys (as Quadriga was), will just freeze withdrawals, come up with some excuse, and then go back to business as usual the next day. Any customer smart enough to ditch an exchange caught out by proof of keys is smart enough to not be storing their coins on an exchange in the first place.

[jaypiepie]

For anyone that Doesn't know what Proof of Keys is it was an Idea that began in 2018 by Trace Mayer on twitter that involved the Bitcoin community as a whole retaking control of their Funds if only for a day. Most people leave a lot of their Bitcoin on centralized exchanges which are often prone to hacks, exit scams, insolvency and as of today are increasingly enforcing a creeping KYC on their users.

https://twitter.com/TraceMayer/status/1071870548421066753


Proof Of keys was meant as way for the Bitcoin community of retaking and exercising control of their bitcoins ( not your keys not your Coins) by simultaneously withdrawing all their Bitcoins every January 3rd of the year from centralized exchanges, third-party bitcoin services and Custodial wallet providers and moving it to private wallets controlled by themselves.

This was meant as a way of exposing exchanges that were perhaps running fractional reserves, faking trading Volumes and/or generally being disingenuous with their users. This would also highlight the true sovereignty that bitcoin provides to holders.

However 2 years on the movement doesn't seem to have gained as much traction as originally hoped (maybe somewhat forgotten), with community participation being somewhat limited based on, on chain data which did not suggest any spike in transactions on or leading up to January 3rd in both 2019 and 2020.

And yet even with this limited participation many exchanges were reported to have delayed/frozen withdrawals or haltied trading for supposed maintenance either a few days or a week leading up to the proof of keys event including Hitbtc, Robinhood, Poloniex, Qudriga ( Exit scammed later )

Given the limited participation and how critical this can be as a regular way of keeping exchanges in check what do you think can be done to spread greater Awareness about Proof Of keys and ensure greater community participation (perhaps limited participation was because so many people still dont know how to use private wallets safely and simply use exchanges for storing all of their cryptos)when the Next proof of keys event takes place in 2021.

What is Proof of Keys

https://www.proofofkeys.com/

https://academy.binance.com/security/the-ultimate-guide-to-proof-of-keys-day

Other Sources and Useful Links

https://www.coindesk.com/proof-of-keys-bitcoin-bank-run
https://www.coinspeaker.com/proof-of-keys-exchanges/
https://news.bitcoin.com/proof-of-keys-day-returns-on-bitcoins-11th-birthday/
https://icoexaminer.com/ico-news/cryptos-day-for-proof-of-keys/
https://bitcoinist.com/not-your-keys-not-your-coins-what-proof-of-keys-day-means-in-2020/

you need to secure your proof of key it is important to all wallets do we have.proof of keys is most securing for wallet to use like blockchain.if you dont have key you do not have allowed to save you currency to a WALLET

[stompix]

For anyone that Doesn't know what Proof of Keys is it was an Idea that began in 2018 by Trace Mayer on twitter that involved the Bitcoin community as a whole retaking control of their Funds if only for a day.

You already had the answer in the first line of your text, there is no point going over the rest.

What bitcoin community, how is this community defined? People that hold coins? They have different views, some are holders, some are speculators, some threat it just as money not interested how much will be worth tomorrow but how much in $ they can make today using it. There is no global community, there is no local community with the same thinking, the same way of doing things, and more important with the same knowledge.

A guy started a movement on twitter, so? Do you think just because you have a million followers the whole world cares what you do? And what he is doing is nothing other than preaching to the choir, the ones who really are interested in this movement where the guys who already had their coins in their own wallets, the rest...well, simply put, they don't give an f word!!!!

You're witnessing the consequences of something starting to go mainstream, ideals are forgotten and interests are taking over, it happens with everything.

Quadriga ofcourse is not a great example here since despite being exposed a lot of people continued to deposit more money into It, but like you said some people will never learn. ( similar situation happened with bitkonect with people giving them money upto a day before they went belly up)

And they will never learn, people are either blinded by greed or overcome by laziness, the Quadriga story will repeat itself, same for phony ICO or IEO or DeFI, people are cheering for services that provide ease of usage, for crypto banks, for a lot of other services because they don't like to have this burden on their shoulders, they like to have somebody else to take care of it for them.

So, proof of keys, nothing will come out of it!

[kezinaur14]

I guess people don't care enough. I've never personally participated on these, even if some exchanges failed in the past on these, what does it matter now, I'm always able to withdraw my crypto from the exchanges I've chosen to use anyway, stressing their servers for no reason of course will clog them up, I think people just didn't care enough about it.

[Killrbit]

I guess people don't care enough. I've never personally participated on these, even if some exchanges failed in the past on these, what does it matter now, I'm always able to withdraw my crypto from the exchanges I've chosen to use anyway, stressing their servers for no reason of course will clog them up, I think people just didn't care enough about it.

Well its one day later since you have posted this comment and in that time Kucoin has just been hacked for 200 million usd. So this kinda proves my point if not about proof of keys but about how secure your money is on an exchange.

And yes you can say that i don't use Kucoin or it always had a bad reputation. I only use binance or coinbase etc and those are safe. But in reality both of those exchanges have been hacked in the past as well, it is just that they were large enough to be able to cover losses associated with the hacked funds. So can you really just depend on the fact that the hack will not be large enough to effect you or take the exchange down. 

So i say again if u want to keep some money for trading on an exchange fair enough, but if you are using that has your primary form of storage for your Bitcoin or other cryptos then you are only asking for trouble.

Go check out the Kucoin telegram channel to see what a shit show that is for users whose funds are now locked.

[o_e_l_e_o]

So i say again if u want to keep some money for trading on an exchange fair enough, but if you are using that has your primary form of storage for your Bitcoin or other cryptos then you are only asking for trouble.

Yeah, that's kind of my point as to why this "proof of keys" movement is pointless. In the case of this KuCoin hack, then in all likelihood everyone who tried to withdraw their bitcoin on January 3rd would have been able to do so without any issue. If they all then deposit it back the next day, then it has made exactly zero difference to their safety, and they would all still be in the same boat they are in now with the exchange being hacked, funds being locked, withdrawals being frozen, etc.

Part of the reason people leave their coins on an exchange is because they are too lazy to spend a few hours to learn how to safely set up their own wallet. If they are willing to go through that process just for the proof of keys day, then they would be willing to go through that process any time for their own safety and security.

Better for everyone to just teach newbies to withdraw any coins they have bought as soon as possible, and to keep their coins off exchanges permanently unless they are being actively traded.

[franky1]

i personally never store my hoard in an exchange. i do however use day-play amounts for fun. but never store long term.
i agree with all posts o_e_l_e_o said. and the problem is:
1. when a exchange 'freezes' withdrawals. people dont actually report them/blacklist them
2. preparing for a event. the organisers dont really go into a preparation plan of showing where people should store coins offline
EG if they spent the weeks prior to the event, preparing people. giving them instruction guides for each wallet and showing how easy it is. then on the day. boom... bankrun
but just saying 'on day X withdraw coins please #proofofkeys' is just so unorganised.

the only time it would be a success permenantly is if exchanges did actually become regulated to actually produce a list of their cold wallets. and actually allow freedom to withdraw under all circumstances with financial penalty per freeze that outpaces the amounts involved with the withdrawal. (making it an actual penalty to hold onto coins)

even if the exchange is not fractional reserving and not spending the coins elsewhere. just the very fact that an exchange that does have the coins but doesnt allow freedom of withdrawal during a bankrun. is something that should become illegal in of itself

i understand fiat banks only get deliveries of so many bank notes a day so when they have bankruns at their local branch they can run out of money in that day thus i can understand they need to limit amounts withdrawn per day.. but bitcoin exchanges should have no excuses. they should have the funds ready to withdraw. no exceptions

[o_e_l_e_o]

EG if they spent the weeks prior to the event, preparing people. giving them instruction guides for each wallet and showing how easy it is. then on the day. boom... bankrun
but just saying 'on day X withdraw coins please #proofofkeys' is just so unorganised.

If it ever reached a level where it was so widespread and widely publicized and supported that it looked like a significant number of people were going to take part, then the exchanges in question could easily prepare for that by mobilizing cold storage, requesting outstanding payments from third parties or borrowers, pulling bitcoin back out of investments or other places it was tied up, even selling altcoins for bitcoin or simply buying more bitcoin. And then the very next day they can go ahead and reverse all those decisions and go back to operating a fractional reserve. It would be a victim of its own success, and even if it became huge, would still prove nothing and still provide no additional security for the other 99.7% of the time.

the only time it would be a success permenantly is if exchanges did actually become regulated to actually produce a list of their cold wallets.

That's a possibility, but again, I don't think it would change anything. Tether were forced by a court to reveal their holdings. They had to reveal that they lied repeatedly - not only is Tether not backed up 1-to-1 with USD as they claim, but about 30% of it isn't backed up with anything. In additional, of the 70% that is backed up, the majority of it is backed up with other cryptocurrencies and assets and not USD at all. In among the "other assets" category, includes loan repayment they are making to themselves to pay off a $800 billion loan in Tether they printed out of thin air and gave to themselves to stop them from becoming bankrupt.

Did the crypto community rightful shun Tether, dump all their bags, and stop using it? Of course not, that would be far too sensible. Tether remains the most widely used stablecoin and printed another $5 billion out of thin air in the last month.

The number of idiots who are all too willing to buy in to ICOs or IEOs or DeFi or whatever the next "get rich quick" scheme is shows that even if an exchange was proven to be insolvent, people would keep using it.