In case the festivities have played havoc with your mental calendar, today is Jan 3. That means it’s now 11 years since the Bitcoin Genesis block was mined (in other words, it’s Bitcoin’s birthday).
And it’s also the annual Proof of Keys celebration created by Trace Mayer.
So, what exactly is that and what do people mean when they say “not your keys, not your crypto”? Let’s take a closer look…
What is Proof of Keys?
The Proof of Keys celebration is all about taking control of your funds. Contrary to popular belief, when you own cryptocurrencies, you never actually own any digital coins.
What you receive when you purchase cryptos are private keys that give you access to the funds you bought. These are a long jumble of letters and numbers allowing you to make transactions.
When you keep your BTC, ETH, or any cryptocurrency on an exchange or similar third-party service, you rescind control of your private keys. This has a few implications, as you can see in the helpful explainer video below by exodus.io.
You see, we’re very used to giving up control of our money to banks. We deposit our earnings into a bank and trust them to keep it safe. But people have been burnt before from bank collapses and account freezes.
And when it comes to cryptocurrency, this nascent space presents some risks of its own.
While regulators are getting stricter, there is still a real lack of protection for exchange users whose funds may be exposed to hacks.
There’s also the possibility that the exchange or wallet provider you use becomes insolvent, has its accounts frozen, or pulls a salacious exit scam.
In the event that a less-than-desirable