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/
