Tomorrow could end up being a significant day in crypto's history
The bitcoin community has been rallied up due to the urging of Trace Mayer regarding his Proof of Keys event.
Trace is a renowned bitcoin investor/evangelist and was also one of the early posters on steemit.com.
He is somewhat of a celebrity in the crypto interwebs.
What is Proof of Keys?
Proof of Keys is where everyone is supposed to withdraw any bitcoin/crypto they have sitting on exchanges and move it to hard wallets for the day.
This will expose which exchanges really have what they say they do.
Basically, they premise/point that Trace and his supports are trying to drive home is that you don't really own your bitcoin unless you have the private keys.
When those coins sit on an exchange, the exchange owns the coins, not you.
Should something happen to that exchange, you are likely out of luck since you don't actually have the private keys to those coins sitting in your account on the exchange.
You are at the mercy of the exchange at that point, which according to many of the die-hard crypto enthusiasts, was the whole point of crypto in the first place. To take control of your finances.
The even bigger issue...
An even bigger issue with this event has to do with the exchanges themselves.
One of the main reasons this Proof of Keys event is taking place is to help show which exchanges have been swimming naked so to speak.
IE, trading crypto that they don't actually have.
Which in a round about way is suppressing crypto prices as there is an artificial increase in supply vs. what there is supposed to be.
If exchanges don't actually have the bitcoin to back up what they say they have, and everyone tries to withdraw their coins, the exchanges will be exposed.
Interestingly enough, there is already one exchange that has disabled withdrawals ahead of the event - HitBTC. Whether that is related or not is not entirely known at this time.
The plan is make this a yearly event on January 3rd, which is the same day that bitcoin first launched exactly one decade ago.
(Source: https://www.cryptonewsz.com/hitbtc-freezes-user-accounts-before-proof-of-keys-event/4901/)
Will this be good or bad?
There can be arguments as to whether this will actually be a good thing or not, but at the very least it will give more confidence to investors using these crypto exchanges should they pass.
It could also end up being very bad news if one of the larger exchanges were shown to be insolvent.
My guess is that the participation won't be high enough to cause any real issues, but we will see for sure tomorrow.
It is possible that some exchanges that may not have the inventory needed will be forced to go to the markets and buy it up in anticipation of people withdrawing, which would be good for prices.
In fact, that could be part of the reason for some of the buying across the board today, though my opinion the recent buying is more likely due to several other reasons which I will post about tomorrow.
Stay informed my friends.
Image Source:
https://www.ccn.com/bitcoin-exchange-hitbtc-freezes-customers-accounts-ahead-of-proof-of-keys-event/
Follow me: @jrcornel
I recently watched a vlog about it. In my opinion many of the existing exchanges will be exposed if this action takes place...
Even though I highly doubt that all those traders and hodlers will withdraw almost all their assets. Some of them are at a great loss as we speak and might not be willing to sell at these lows.
Needs way too good coordination doesn't it?
Thanks for spreading the news @jrcornel
Well they don't have to sell per say, just transfer off the exchange. Personally I don't think the participation in this event will be anywhere near high enough to see any real effects from it.
Anyone seen my keys? 😂😂😂
Did you check your pocket?
Sounds like something that is overdue, thanks for educating me to the realities. Sounds like things are as bad as Wall St., ETFs, and derivatives. Trading contracts on things they don't actually own. I guess it's part of the dangers/problems with a nascent industry.
Yep, if something can be exploited for financial gain, it likely will be by someone.
Will be interesting to see if the transactions also bring back to light the scaling issues with bitcoin as fees may also increase as a secondary impact.
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I don't think we will see enough participation to see a major spike, but correct we might see a little spike as well as some backlog of transactions if the participation is high.
About a year ago I posted evidence of HitBTC not having enough coins to cover withdrawals... It's easy with coins that have public blockchain as everyone knows which address exchange use for withdrawals.
Yep, they have been on the shady list for a long time now. No surprises there...
I find this idea interesting, and so i will resteem it just to get more people involved.
Thanks. Yea it probably won't get enough participation to really make much of a difference, but it is an interesting idea.
Cool, thanks.