Annual January 3rd Proof of Keys Celebration of the Genesis Block

[nullama]

3rd of January is the annual proof of Keys Day:

https://www.proofofkeys.com

This day commemorates the genesis block, 3rd of January 2009, the day that Bitcoin was born, by making sure you own your bitcoin. Always remember:

Not your keys; not your coins

If you have bitcoin stored at a company wallet(exchanges, banks, or any company), then you simply don't have 100% ownership of them. This day encourages everyone to withdraw bitcoin into your own wallets, even if it's temporarily, to make sure that your funds are still safe and that you can eventually withdraw it (some companies assume you won't be moving those bitcoins until it's too late).

Having your bitcoin controlled by your own wallet gives you a lot of benefits, and most importantly, it makes you realize that you don't need any bank or other institution to use money.

Happy proof of keys day!

[Kemarit]

I think this is the first year of it's celebration:

https://bitcointalk.org/index.php?topic=5092198.0

And as far as I can remember, it was conceptualized by Trace Mayer (https://twitter.com/tracemayer?lang=en). And his concept was for us to reclaim our "monetary autonomy".

Anyhow, I don't have BTC in any exchange though, it was not a good practice for me. And we know that it is really not advisable because of the risk involved.

[o_e_l_e_o]

This day encourages everyone to withdraw bitcoin into your own wallets, even if it's temporarily, to make sure that your funds are still safe and that you can eventually withdraw it (some companies assume you won't be moving those bitcoins until it's too late).

Emphasis mine. This is why this day is pointless.

Withdrawing your coins from an exchange for a single day and then sending them straight back to the exchange proves nothing. The majority of users will not do this, and so exchanges can quite happily continue to operate a fractional reserve, scam, insolvency, or anything else behind the scenes, and still process your withdrawals. Even if a large number of users did do this, the day is publicized and exchanges can prepare for it in advance, and then go straight back to the same shady behavior the very next day.

All this does is give people a false sense of security that their coins are safe. If you want your coins to be safe, they need to be in your own wallet permanently. Anything else is a risk.

[NeuroticFish]

Withdrawing your coins from an exchange for a single day and then sending them straight back to the exchange proves nothing. The majority of users will not do this

It could prove whether the exchanges/custodian services still have all those coins. I expect that a surprisingly high number of them won't.

But indeed, nobody will do that, since it means withdrawal fees, much higher than the network fee. And it means quite a risk since many have awful security setup on their device hence it's worse than the risk to keep the funds at the custodian.

People should - especially this day - be told to withdraw forever (not temporarily) to their own safe wallet all the funds they don't need to be kept in others' custody. And from here the obvious explanations derive - about custody, about safety, about own wallet...

[tranthidung]

https://www.proofofkeys.com

Not your keys; not your coins

It is important to keep your Bitcoin safely. It's your private key.

• https://notyourkeys.org/
• In order to own private key, you must use non-custodial wallets.
  
  • Recommended wallets
  • Verify wallet first, before using it to store your Bitcoin. Because if you download a fake wallet and use it to store your Bitcoin, your Bitcoin will be stolen
  • Back it up safely and offline. You should have multiple backups and have methods to keep them safely from water, fire, physical damages, etc.

[Lucius]

I really wish they change this part which suggest people to return their coin to custodial service to only doing it when it's necessary (e.g. selling BTC).

One wonders if behind the whole initiative is actually one of the big crypto exchanges that want to create a sense of security for their clients by convincing them that they really own their Bitcoin (altcoins) for at least one day. The only thing that would be logical is to warn crypto users every day that the only correct way to store your coins is a non-custodial wallet - just the way you do with your avatar and personal text.

[o_e_l_e_o]

It could prove whether the exchanges/custodian services still have all those coins.

It doesn't though. Let's say an exchange has had 100,000 BTC deposited by customers over the last year, but they've decided to invest 90,000 of that in various risky investment vehicles for their own profit while the customers assume the risk. They only keep 10,000 BTC in their wallets. A handful of users come along today and withdraw all their bitcoin from the exchange, which totals 5,000 BTC. The exchange fulfills those withdrawals without issue, and then tomorrow, the customers send that combined 5,000 straight back to the exchange, erroneously believing their bitcoin are safe and the exchange is solvent.

Even if every single person withdrew all their coin today (which will never happen), the exchange can just borrow bitcoin for the 24 hours needed, repay it all the next day, and continue being insolvent.

One wonders if behind the whole initiative is actually one of the big crypto exchanges that want to create a sense of security for their clients by convincing them that they really own their Bitcoin (altcoins) for at least one day.

Could be. Don't want everyone trying to withdraw their coins on some random day when the exchange is not prepared for it. Better to have one day a year they can prepare for.

The whole thing should be changed to a day of "Not your keys, not your coins" awareness. A temporary withdrawal from exchanges proves nothing.

[nullama]

Yeah, people should keep their bitcoin in their own wallet, of course.

But some people will just not do that for various reasons and you won't change their minds. For them, it's better to withdraw temporarily to make sure the companies actually have the coins.

[NeuroticFish]

A handful of users come along today and withdraw all their bitcoin from the exchange

Clearly this cannot work unless a huge majority of the users withdraw. And even then, we don't know how many died, or lost or abandoned the accounts.
The only way to do anything in the matter is in big numbers. Vires in numeris.

Even if every single person withdrew all their coin today (which will never happen), the exchange can just borrow bitcoin for the 24 hours needed, repay it all the next day, and continue being insolvent.

If the number of people withdrawing is huge, they'll withdraw from all services and there may not be options to all of them get a loan. There won't be enough lenders available.

However, we both know that this is wishful thinking. And the actual proper way is:

The whole thing should be changed to a day of "Not your keys, not your coins" awareness.

[pooya87]

One wonders if behind the whole initiative is actually one of the big crypto exchanges that want to create a sense of security for their clients by convincing them that they really own their Bitcoin (altcoins) for at least one day.

Could be. Don't want everyone trying to withdraw their coins on some random day when the exchange is not prepared for it. Better to have one day a year they can prepare for.

It sounds like conspiracy theory but when you consider these and also the increased revenue that these exchanges make for these silly temporary withdrawals (from the big fees they charge) you can see that such theories don't look that far fetched anymore.

[Lucius]

It sounds like conspiracy theory but when you consider these and also the increased revenue that these exchanges make for these silly temporary withdrawals (from the big fees they charge) you can see that such theories don't look that far fetched anymore.

If we take a closer look at the companies participating in this event, then there are the two biggest ones on the list - and it is more than obvious that any event that gives legitimacy to their business suits them. The greater the awareness of the importance of using non-custodial crypto wallets, the greater their (crypto exchanges) activities in the opposite direction will be, so we can expect some of the next Proof of Keys to last two or three days maybe.

Yet even then it means nothing, except when everyone would make a withdraw, and then many crypto exchanges would be in real trouble.

[hatshepsut93]

This is like quitting smoking for a day and then going back to smoking 2 packs every day. I understand the initiative of trying to check the solvency of services, but it's unrealistic that a critical mass of users necessary to achieve this is going to participate. A lot of users probably don't even know about such event, because they don't check the crypto news daily, and out of those who do only a tiny percent would be motivated enough to inconvenience themselves with doing some transactions.

[franky1]

Even if every single person withdrew all their coin today (which will never happen), the exchange can just borrow bitcoin for the 24 hours needed, repay it all the next day, and continue being insolvent.

so in your theory. for the main exchanges that have 500,000 coins associated with their cold wallets EACH.
if every user withdrew their coin from exchanges (lets say 1.5million btc(conservative random number)) came out of large coldwallets.. it would be a simple thing for exchanges to "borrow" 1.5mill of bitcoin..

um no.
bitcoin has no debt/loan feature. there is no bitcoin creation/hidden premine waiting to be borrowed.
every coin is accounted for on the blockchain.
its plain and easy to see where the coins are

what actually happens is the market orders flatten to small amount of orders. draining the 'supply' side of market orders for bitcoin (near zero 'sellers')

exchanges would just 'circuit break' (close trades) for the day to 'lock the price' and prevent massive price spikes.
yep less coins on a market =price rise.

..
with all that said. it appears that "proof of keys' has been an initiative/campaign that has not really been adopted
out of the 79.1million utxo's on average for the last 4 days. january 3rd only seen a small 'blip' increase of 50,000 utxo's
meaning less people moved coin on the 3rd. (not all 50,000 are proved to be lined to coin withdrawals from exchanges for the reason of 'proof of keys')

yet on christmas eve 250,000 utxo were created. which shows more decisions to move coins happened due to christmas than to 'proof of keys'

[o_e_l_e_o]

so in your theory. for the main exchanges that have 500,000 coins associated with their cold wallets EACH.

If the exchanges are running fractional reserve or similar,* then the coins that were once deposited on their exchange have been given out in loans or investments or are sitting in the CEO's personal wallet. It is not unreasonable to assume they would be able to recover a proportion of them for a day to cover this "proof of keys" nonsense, before sending them all back the next day. Obviously they are not creating them out of thin air, although in the case of exchanges like Binance, they can always just mint more of their fake wrapped/tokenized BTC, since apparently lots of people don't understand the difference.

*I mean, it's not really a case of "if". We know this is happening. https://cointelegraph.com/news/two-chinese-exchanges-help-themselves-to-user-funds

[nullama]

~snip~

with all that said. it appears that "proof of keys' has been an initiative/campaign that has not really been adopted
out of the 79.1million utxo's on average for the last 4 days. january 3rd only seen a small 'blip' increase of 50,000 utxo's
meaning less people moved coin on the 3rd. (not all 50,000 are proved to be lined to coin withdrawals from exchanges for the reason of 'proof of keys')

yet on christmas eve 250,000 utxo were created. which shows more decisions to move coins happened due to christmas than to 'proof of keys'

I think it's mostly due to the date itself, most people are just recovering from a new years eve party.

It would probably be more efficient if it's done in a more neutral date.

[leea-1334]

I move regularly all my coins end of every period according to my "threshold" amount, never on a fixed date, more like it depends on the price of Bitcoin, the amount in BTC I have at a certain time. I know coins in exchange or service or whatever is not safe,,, but it is much easier for me to receive certain BTC repeatedly in a small account and then withdraw it for one fixed fee to my wallet.

Rather than get 10x input and then force to pay big fee to send it all out.

Proof of key good idea but anybody who does this probably will not follow this funny time.

[witcher_sense]

Were I a dishonest owner of a cryptocurrency exchange that operates as a fractional reserve bank, I would employ the same methods as the bankers all over the world have used for centuries to avoid bankruptcy during the "harsh times" like this proof of keys day.

᠌First of all, I wouldn't try to persuade my customers not to withdraw their funds because it would only raise more suspicion and cause unnecessary panic. Instead, I would do exactly the opposite: I would make a special announcement to my clients that would encourage them to check my honesty and withdraw their funds. I am sure that more than half of the clients would not withdraw funds, simply because they would believe in my good intentions to prove my honesty.

Secondly, I would suspend withdrawals temporarily explaining my decision by the need for maintenance on the website, for example, but it is not an ideal solution because it would negatively affect my reputation and would result in an even higher number of withdrawals and, consequently, bankruptcy after a temporary suspension is finished. Instead, I would come up with something that would incentivize my clients to keep their funds untouched. For example, I would offer them higher interest rates on their deposits. After all, if I make money by lending out their money, why not give them some part of my profit to save my dishonest business?

Thirdly, I would collude with other dishonest cryptocurrency exchange owners and persuade them it is in their personal interests to bail out me so that I could bail out them in the future. Perhaps, we would establish some entity like Central centralized exchange the only function of which would be to bail out other centralized exchanges in case of bank runs on exchanges.

The fact that exchanges don't do all that and even don't seem to care about the celebration of proof of keys day proves that it simply doesn't work and proves nothing.

[franky1]

so in your theory. for the main exchanges that have 500,000 coins associated with their cold wallets EACH.

If the exchanges are running fractional reserve or similar,* then the coins that were once deposited on their exchange have been given out in loans or investments or are sitting in the CEO's personal wallet. It is not unreasonable to assume they would be able to recover a proportion of them for a day to cover this "proof of keys" nonsense, before sending them all back the next day.

if a exchange was fractional reserving its users exchange balance by spending 90% of the real coin deposits on the exchange owners personal endeavours. and users ran a 500k coin "bank run" of their balance. ofcourse the CEO of an exchange would have to try and claw back 450k the ceo spent/stored elsewhere to make the users whole at their withdrawal request.
this is not a 'loan'. this is to undo a theft of coins..

if the CEO cant make good on the customers bank run because he spent 450k coins and no longer in his control. . the CEO cant do a 1 day 'loan' to find 450k from other sources. there is no special reserve of insured/premined coins set aside for such loans.
all bitcoin on the blockchain are audited and noted. thats the point of blockchains.

what actually happens is a MTGox event. where customers simply get informed that the exchange has lost their coins and customers cant withdraw.

Obviously they are not creating them out of thin air, although in the case of exchanges like Binance, they can always just mint more of their fake wrapped/tokenized BTC, since apparently lots of people don't understand the difference.

*I mean, it's not really a case of "if". We know this is happening. https://cointelegraph.com/news/two-chinese-exchanges-help-themselves-to-user-funds

oh. but it was good that you mention the tokenised/wrapped 'btc' of altnets.. hint hint to other topics.
yes CEO's of exchanges can make multiple 'channels' with users and credit them all with millisats, and pretend the channels funding lock 'peg' is one customers when the same pegged funding lock BITCOIN transaction is used as 'proof of peg' over multiple channels.
the CEO setting up the channels can just make many many temporary_channel_id and because there is no network wide audit system in altnets/offchains. they can abuse this

but again. this is not "loan" of real BTC this is theft/fraud of BTC by handing counterfeit/fake tokens

(a few wallets hide the funding lock info of channels, outside of the channel partners whereby user in channel X234 does not talk to user in channel y745 to compare pegs) because some altnet wallets have privacy to not reveal the funding lock(peg) outside of their channel partner.(use of temp channel id instead of funding lock derived ID)
yep even altnets like LN can fractional reserve.

now do you see why altnets without a blockchain. and why exchange balance are a risk.

[o_e_l_e_o]

Secondly, I would suspend withdrawals temporarily explaining my decision by the need for maintenance on the website, for example, but it is not an ideal solution because it would negatively affect my reputation and would result in an even higher number of withdrawals and, consequently, bankruptcy after a temporary suspension is finished.

Wishful thinking. Remember when HitBTC froze their customer's accounts and suspended all withdrawals a couple of days before this day back in 2019? https://www.ccn.com/bitcoin-exchange-hitbtc-freezes-customers-accounts-ahead-of-proof-of-keys-event/
What happened afterwards? Everyone realized they were being scammed, withdrew all the coins that they could, and then HitBTC went bankrupt? Lol no, they are the 3rd biggest exchange in the world in terms of volume.

all bitcoin on the blockchain are audited and noted. thats the point of blockchains.

So you could tell me if Coinbase are holding fewer than the 1 million or so bitcoin they claim to be holding? And you could tell me if they are moving coins in and out of somebody's personal wallet? Impressive, given that their storage is split across thousands of addresses and no one knows which addresses those are.

what actually happens is a MTGox event. where customers simply get informed that the exchange has lost their coins and customers cant withdraw.

In the event that everyone withdraws, sure. But in my scenario, they only need just enough funds to cover everyone who participates in this useless day, which is only going to be a couple of percent of their users at the absolute most.

oh. but it was good that you mention the tokenised/wrapped 'btc' of altnets.. hint hint to other topics.

Lol. You just can't help yourself. Let's not derail yet another thread with your repeated ramblings.

[franky1]

all bitcoin on the blockchain are audited and noted. thats the point of blockchains.

So you could tell me if Coinbase are holding fewer than the 1 million or so bitcoin they claim to be holding? And you could tell me if they are moving coins in and out of somebody's personal wallet? Impressive, given that their storage is split across thousands of addresses and no one knows which addresses those are.

LOANS are where the loan giver creates new units of account. (learn how bank loans and mortgages 'create money')
bitcoin as a network accounts for all of the ~19mill coins in circulation.. there is no other mechanism to magic up new coins on the blockchain. its not like altnets/exchange mysql databases that can magic up 'credit'.

an exchange cant 'loan' real bitcoin to withdraw to users in a bank run. if the exchange no longer has control of 500k of coin. they cant hand 500k of coin to users.

thats the whole point of proof of keys. to make an exchange insolvent if it cant honour real bitcoin withdrawals.

exchanges internal balance and its altnet fake token credit is not part of proof of keys. but could be an exchanges escape tactic to pretend solvency if they dictate to only allow altnet withdrawal.. [fake token credit]

but again the point of proof of keys is to have users withdraw their actual bitcoin on bitcoin, not altnets.. because having funds on exchanges and in some wallets of altnets does not prove solvency of the parties involved in these 'agreements of custody'.

as you have already mentioned. altnets can loan. but the bitcoin blockchain cannot.
bitcoins blockchain rules for 'minting' is secure and audited by the network peers. an exchange cannot just mint new bitcoins on the bitcoin blockchain outside of the coin reward rules

also i only mention altnets, when someone before me has mentioned altnets(them derailing first using their silly confusion of features rhetoric)

bitcoin has no loan system.. offchain does(exchange balance and altnet tokens). hence avoid offchain to avoid fractional reserve risk. hence why proof of keys became a campaign(although many dont listen/try to do it/think its a risk)