Proof of Keys was a concept first introduced by Satoshi Nakamoto, the legendary figure behind the birth of bitcoin, but it’s now being promoted further by the likes of Trace Mayer, the host of the “Bitcoin Knowledge” podcast.
Mayer: Proof of Keys Is What Keeps BTC in the Hands of the People
First discussed when bitcoin was released to the public over ten years ago, the concept behind proof of keys involves getting rid of all the trust issues in the monetary space by having people interested in or engaged in bitcoin take possession of the crypto units held by third parties. Therefore, financial independence and monetary say is given to average, everyday spenders – not corporations or banks.
A website devoted to the concept of proof of keys explains:
By demanding and taking possession of their assets, individuals will learn very fast with blockchain proof whether they are part of the elite HODLers or not. Proof of Keys is the annual HODLer initiation.
Putting it in layman’s terms, Mayer explained the idea further on his show, and states that it’s a way of helping to cement people’s autonomy, as there is allegedly no need to rely on banks or financial institutions to keep up one’s financial status. He explains that the concept is a way of helping everyone flex their “monetary sovereignty muscles.”
We show how strong we are, and we do that by proving the keys. We run a full node and we hold our own private keys to our bitcoin and any other crypto, ether, Litecoin, etc., and we withdraw all of our crypto from any third party, from any exchange, from any lending service, from anywhere… We don’t necessarily know who the bad actors are until we start flexing those [monetary sovereignty] muscles. So, proof of keys is how we do that. Centralized third parties having giant stockpiles of bitcoin and crypto goes against the decentralization characteristics or nature [of blockchain].
One of the big problems with having third parties in the picture, he mentions, is that they are often targeted by third parties. This is often the case even today. Most of the time, when a cyberattack occurs, it usually targets a major exchange or other financial business. Rarely do we hear of individuals themselves being hacked or pinpointed by malicious individuals.
Finding Out Who the Nasty Parties Are
Whether those hackers are illicit actors or whether those hackers are governments or lawyers or regulators trying to look for fines, compliance costs or stuff like that is very dangerous.
Despite the entire notion of bitcoin and crypto being based on individuals taking care of their own funds, Mayer states that many large businesses in the industry – including exchanges – don’t want this and are eager to gain control of much of the minted cryptocurrency themselves. As it stands, as much as 1.9 million bitcoins – approximately ten percent of what’s currently available – are held by exchanges.