One of the first things you learn regarding cryptocurrencies is that you don’t technically “own” these assets. Unlike traditional currencies, you aren’t literally transferring coins into your wallet.
Instead, purchasing a digital asset means you’re buying a key that represents ownership of such value. You can use that key to tell the blockchain where to move your assets. This brings into question – do these assets actually exist? The “Proof of Keys” movement, which is coming to fruition as of today, is uncertain of the answer.
Moving the Masses
Trace Mayer, the leader of this movement, claims that members are “going to withdraw all our bitcoin from any third party services just to prove that they’re there. It’s on the blockchain or it didn’t happen.”
His reasoning makes sense. Mayer describes that users often leave their assets on exchanges, which isn’t the safest space to do so. Additionally, investors don’t necessarily “control” their assets when stored online, which is what Mayer and team are bringing to light. Interestingly, this movement is launching on the 10-year anniversary of Bitcoin’s first block.
Mayer and his team are replicating a “bank run” – a situation where citizens rush into a bank to pull their funds as they believe the company is failing. However, Proof of Keys is no surprise movement. This one was carefully being planned.
Ideally, if everyone pulls their funds away from exchanges, those who are only keeping some asset reserves on the website will be “called out” for doing so, since most of the users’ assets would be kept offline and out of their control.
While this could have been a random resistance run by a bunch of nay-sayers, prominent names in crypto have actually backed the movement. Nick Szabo of smart contract fame, Coinbase CTO Balaji S. Srinivasan, Symbiont president Caitlin Long have all publicly supported Proof of Keys.
“Noding” It Up
Then, these investors need to download the entire Bitcoin blockchain to a device, becoming a full node. This way, they have the whole Bitcoin history available to them alongside all of the blockchain rules. Full nodes don’t need to rely on an exchange or anything else to validate transactions and can do so themselves.
“Anyone who doesn’t want you to hold your own private keys,” says Mayer, “they’re your monetary enemy. They don’t want you to be free and independent with your money. That’s just the way it is.” However, users must be careful to withdraw and store their assets properly. If done wrong, investors could lose their currencies forever.
Despite the movement launching today, investors won’t all be pulling their assets at once. Instead, the transfers will happen over time. It’s uncertain how this will affect results, as one can’t really track all of the different community members. “Really, it is an intensely personal type of activity which will be hard to measure,” says Mayer.
Though it may seem a bit overdramatic, some users are calling this Bitcoin’s “independence day,” as if they’re going to defeat all cryptocurrency exchanges out there. While this is possible, it’s unlikely that every investor will want to move their assets into their own control, at least not at first.
Mayer has a more rational viewpoint on the subject:
“I think most companies and individuals will operate normally with no significant interruptions, the bitcoin network will be strengthened in its decentralization properties, and many individuals and the community will have a sense of accomplishment and camaraderie.”