Keeping your private keys safe and secure is essential to ensure financial independence. Unfortunately, many cryptocurrency investors trust their money to be left solely on exchanges. But this practice is far from being safe because the exchanges have full control over the cryptocurrency deposits.
Since the early days of Bitcoin, billions were lost due to exchange hacks and scams. The hack of the Mt. Gox exchange in 2014 is one of the most famous and controversial cases, and it’s still under investigation.
But what does all that have to do with the Proof of Keys day?
What is Proof of Keys?
As previously discussed, many people leave their cryptocurrencies stored on exchanges. This is inherently dangerous because these exchanges have full control over the private keys of their deposit addresses.
In this context, the Proof of Keys day aims to prevent investors' dependence on exchanges to conveniently store their cryptocurrencies. The concept is often presented with a short, but effective sentence: not your keys; not your Bitcoin.
Put in another way, the Proof of Keys day celebrates financial sovereignty. Its goal is to encourage cryptocurrency investors to move their funds from exchanges to their personal wallets. By taking full control over one's own private keys, they're ensuring no one but themselves can access their funds.
Four important outcomes of the Proof of Keys day
The philosophy behind Proof of Keys day lines up perfectly with that of Bitcoin. By replacing third-party intermediaries with a trustless value-transfer system, individuals can cooperate securely and confidently with one another - without giving up their monetary autonomy.
So, what are some of the important outcomes of the Proof of Keys day?
Teach new investors how to move coins around
Cryptocurrency investors should be comfortable moving cryptocurrencies from one place to another. While this may sound simple to some, newcomers often find it hard to understand the many types of wallets and how they are used.
Remind investors who really owns their private keys
As stated, the main mission set out by Trace Mayer when starting the Proof of Keys day was to encourage every cryptocurrency investor to own their private keys. Leaving their cryptocurrencies on an exchange means that investors have zero control over their funds.
Even though it only happens once a year, the Proof of Keys day is an opportunity for every investor to take control of their funds. While the day is a good reminder of who owns what, it means very little if investors don't follow through with securing what's theirs.
Expose shady or dishonest exchanges
Within the cryptocurrency space, the Proof of Keys day may encourage thousands of investors to withdraw their funds from the exchanges. If a great percentage of investors decide to do that on the same day, it can eventually expose the exchanges that practice fractional reserve methods or that lie about their true reserves.
Fortunately, though, the transparency of Bitcoin and other blockchain networks makes it easier for exchanges to make their holdings publicly verifiable.
Celebrate the Bitcoin genesis block
How to take part in the Proof of Keys movement
It doesn’t matter if you are new to cryptocurrencies or a veteran. Participating in the Proof of Keys day is very easy. As mentioned, the idea is to declare financial autonomy by withdrawing all funds from exchanges (or other third party services).
Next, choose a cryptocurrency wallet that you are comfortable using. Along with usability, it’s also important to consider the level of security of each wallet type before making your choice. The last step involves sending your funds to your personal wallet so that you own and control your private keys.
Some people participate in the Proof of Keys movement once a year. They move their funds away from the exchange for one day (on January 3rd) to celebrate and affirm their financial sovereignty.
The Proof of Keys day is a simple but important movement that reminds cryptocurrency investors who really owns their private keys. Millions of crypto enthusiasts take part in the celebration, moving funds away from exchanges to their personal wallets.