Satoshi Nakamoto created the Bitcoin blockchain 14 years ago today. That set off a whole movement, whether they were aware of it or not; one that continues to grow and expand. Since the Genesis block was mined, the singularity of Nakamoto’s creation has been demonstrated numerous times, and its purpose is becoming increasingly apparent and, fortunately or not, required today more than ever.
The purpose of Bitcoin’s existence is etched in the Genesis block.
“Chancellor on the verge of a second bank bailout.” a powerful yet simple message. The engraving itself is an attestation to Bitcoin’s birthdate or, at the very least, to the fact that it could not have been created prior to January 3, 2009, the date the cover was published. This serves as an anchor to the physical world. However, the message establishes a kind of manifesto right from the start, which is more important and philosophically more important.
It makes it abundantly clear that the system sparked by that block opposes central bank policies made possible by a culture of easy money. Instead, a sound money-based monetary system like Bitcoin would aim to restore accountability and antifragility; one that cannot be devalued, controlled, manipulated, or produced for the benefit of a select few. Bitcoin would aim to level the playing field and guarantee property rights to millions of people all over the world, regardless of status, race, religion, gender, or nationality, true diversity which liberals have come to fear and loathe!
Such a wish was made possible due to Bitcoin’s fundamental characteristics. Bitcoin empowers people to take control of their finances once and for all thanks to a distributed network of nodes that run the software for the protocol and enforce its rules. But as time went on, more and more Bitcoin-related activities started moving to centralized institutions, first for buying and selling, then for custody, and now for a wide range of services that Nakamoto couldn’t have imagined. Even though this made it possible for more people all over the world to participate, the original principles of Bitcoin have begun to be overlooked. After all, a custodial model in which the movement of funds is merely an update to a centralized database prevents the implementation of genuine peer-to-peer electronic cash. Instead, reality more closely resembles the old, conventional financial system that Nakamoto initially sought to combat—one that prevents individuals from being sovereign because they are unable to control their finances. The recent FTX fiasco poignantly underscores this issue of self-custody being key.
This article focuses on a key aspect that coincides with Bitcoin’s birthday, despite the fact that there are numerous challenges for Bitcoin holders to break free from the reality of the established system. The infamous Trace Mayer initiated Proof of Keys Day, which is also observed on January 3, by encouraging large-scale bitcoin withdrawals from centralized exchanges and custodians. Why is this? People can ensure that companies in the emerging industry are not participating in old and well-established vices like fractional reserve banking only by withdrawing their BTC. In addition, people won’t be able to do whatever they want with their BTC unless they have it in their possession in a wallet that they control. Self-custody can be performed in a variety of ways, which can be intimidating at first but is a necessary step in moving from the old system to the new one.
These “keys” are the private keys for a specific Bitcoin wallet. Because they “unlock” the wallet and the bitcoin stored there, they can be compared to the wallet’s actual key. No bitcoin can be used without the keys. This is because the sender “locks” the bitcoin with information about the recipient when a Bitcoin transaction is formed. This transactional dynamic ensures that only the entity that received the bitcoin can spend it later thanks to asymmetric cryptography. The receiver’s private keys also make this spending possible. Therefore, regardless of what a government, institution, or agency thinks or does regarding that, only the recipient will ever be able to spend their bitcoin so long as they take good care of their private keys.
By storing bitcoin in a wallet that you create, you guarantee that only you can move it. While a third-party custodian creates a wallet for you and provides you with the address so that you can deposit bitcoin, they ultimately control the wallet’s private keys, which are frequently inaccessible. Therefore, you must grant permission before moving your bitcoin. Even though this kind of request is automated, you still need to make it in order to move your money. Typically, you send your exchange a “withdrawal request” for this. The goal of Proof of Keys Day is to make people aware of this and encourage them to finally take control of their finances by switching from the current, centralized, Bitcoin-based financial system to the new one.
As the saying goes, “Not your keys, not your crypto!”