Cryptocurrency advocate and investor Trace Mayer is leading the call for Bitcoin holders to make tomorrow, 3 January 2020, Proof of Keys day – a time for all owners of BTC, no matter if a whale or a minnow, to declare monetary sovereignty by taking their coins off any exchange or third party wallet and into their own possession where they control their private keys. Firmly established as a trend last year, the hashtag #proofofkeys has been building support from a number of surprise sources across social media over recent weeks.
Stemming from a belief that the trading volume on exchanges is multiple times higher than the available circulating BTC supply, Proof of Keys is a way of asking exchanges and third party custodians to prove their trustworthiness by delivering on a customer’s stated BTC balance. If widely applied, such a stress test would quickly expose which entities are operating by using the same fractional reserve practices favoured by traditional banks and financial institutions.
Bail-in, Bail-out
The specified 3 January date has resonance within the crypto community as it is the accepted anniversary of the Bitcoin Genesis block mined in 2009. That original block contained a transaction of 50BTC as a reward for mining it but perhaps more relevant to the Proof of Keys movement was a message written into the code referring to a headline from one of the U.K’s most prominent newspapers – “The Times 03/Jan/2009 Chancellor on brink of second bailout of banks.”
While the newspaper article speaks of British Chancellor Alistair Darling’s options following the financial crisis of 2008, the message still carries weight today as most customers who save wages or income into a bank account are under the illusion they are depositors when they are actually unsecured creditors to the bank.
As the Financial Services Banking Reform Act 2013 discussion paper mentioned, the Bank of England are not confined to just bank bail-outs as in 2008 but can now implement a “a bail-in stabilisation option” which is a function added to the legal mechanisms at hand “…in order to improve the toolkit for dealing with the failure of large, globally systemic banks.”
The U.K. is not alone in this stance and bank bail-ins are supported by all of the G20 countries. An example of how they are intended to work was evident during the banking crisis in Cyprus in 2013.
The similarities between holding cryptocurrency funds on an exchange and holding fiat cash in a bank are striking as it is apparent that having a pin number for a bank ATM or password for a crypto exchange account doesn’t guarantee access or even ownership of your funds.
Proof of Keys is currently the only way to remedy that.
