What do John McAfee and Blockchain WTF have in common? Don’t worry it’s not that much but, we both love crypto and we both preach the mantra “not your keys, not your crypto.” Everyone should share that information with newcomers to the space. For cryptocurrencies to achieve mass adoption we need to make sure new users aren’t burned by the bad experience of having their coins stolen because they didn’t understand how centralized exchanges work. While it is the personal responsibility of the investor to learn about cryptocurrencies before diving in, the existing community can still let newbies know if they are about to step on a bear trap.
HitBTC’s account freeze is another example of why that is true and important. John McAfee warned people about using the exchange, and now they have frozen accounts days before Trace Mayer’s Proof of Keys event.
What is Proof of Keys?
The Proof of Keys event took place on January 3rd to honor the 10 year anniversary of the Genesis Block back in 2009. Trace Mayers wanted this event to help people learn financial autonomy. The point of the event is for users to take their keys off of 3rd party exchanges on the 3rd to raise awareness for new people that have entered the space.
As of January 2nd, 2019, the exchange HitBTC had not commented on the suspicious timing of the freeze. Account holders have mentioned that they have had freezes in the past, but this one is happening right before an event with the intention of exposing the problems with keeping your coins on exchanges – just like a bank run, your funds might not be there when you want to take them out!
Mayers has a video on the Proof of Keys website detailing three classes of Bitcoin citizenship:
First class Bitcoin citizens -hold their own keys and do their own network consensys
Second class Bitcoin citizens only hold their own private keys
Third class Bitcoin citizens -don’t have private keys or network consensys
I like the idea of breaking down the different levels of responsibility and autonomy to help people understand that just buying crypto isn’t financial freedom; there is still more to learn.
While the tone of describing the different tiers of “bitcoin citizenship” has the intention to help people categorize levels of involvement, using a word like “citizenship” sounds elitist, complicated and exclusive.
What really matters here is teaching people about the different levels of crypto autonomy. Cryptocurrency needs to be introduced as a tool that empowers, not degrades or is a burden.
The Proof of Keys event is pretty much an annual fire drill to make sure you control your private keys. It is an effort to teach people monetary autonomy. There is definitely value in this education; some people got into Bitcoin because they saw Kim Kardashian tweet about it. Many aren’t attracted to the space because of their in-depth Austrian economic roots, and they often don’t understand how much responsibility comes with being your own bank. I tried giving someone Bitcoin once, and she kept saying how she has a guy at work that handles all her passwords and can help her keep track of her private keys…I didn’t give her any…because she was clearly going to lose it or have it stolen.
Awareness and Education for Newbies in the Crypto Space
The event will likely prove that exchanges that “fail” Proof of Keys will lose users as a result of their dishonesty and more newbies will know about the yearly ritual of proving your keys. Communities really like that. Every year the comedians of Chicago tweet #withmydick on Christmas Eve. The tradition caught on in 2013 after Matt Drufke was trying to get over his first Christmas without his girlfriend, to cheer him up everyone joined in, and now it’s this weird rite of passage.
I hope #proofofkeys can have the same yearly excitement. People love belonging to a community, especially one where they are helping others via education. I propose we add a short story of how we got our first coin. That way newbies and jaded maximalists alike can come together and share their stories. If we tap into the emotional aspect of teaching others how to take care of their private keys, we can really make this a running tradition.
The timing of HitBTC freezing accounts right before the Proof of Keys event might be a result of the exchange not having enough coins to cover withdrawals. The fear of fractional reserve lending and bank runs in our current system of banking are what drew lots of people into cryptocurrency. If exchanges are acting in the same way FDIC insured banks do people have a false sense of security and don’t really understand the crypto they are transacting with.