“What is needed is an electronic cash payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.”
Satoshi Nakamoto, with that statement simply explained a financial revolution after many years of banks and governments exploiting currency and abusing power.
The financial revolution that was started with the Genesis block of Bitcoin began on January 3rd, 2009, with a message in the block stating simply: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” This was in reference to the front page headline on the newspaper, The Times, and the fallout from the financial recession of 2008 that was brought upon us by bad actions by banks.
Bitcoin began quietly slowly onboarding others to help create the network which is like a roaring freight train today that no one can stop. Bitcoin is more than just a speculative investment that can increase in value over time. It is a symbol of freedom that can free us from the corruption of our current monetary and financial systems that have been corrupted over time by those in power. We live in a world of over 7 billion people and less than 2 billion have access to financial systems and markets.
In case you're totally new to Bitcoin and crypto, we are inviting you to read our blog post dedicated solely to understanging the basics!
Bitcoin and other cryptocurrencies change that. Crypto does not care what side of an imaginary border you live in or who your ancestors are. Crypto gives everyone the ability to participate freely without hindrance and it started with Bitcoin’s creation. Many other cryptocurrencies have since been created. None would exist without the creation of Bitcoin, so it is important that no matter what crypto you are interested in, you learn the history of Bitcoin and why it is important. Every other crypto has been created to try to change or improve something on the Bitcoin mode or add to the features that are available. Now, let’s look at the Proof of Keys and the day we're celebrating it, what it means, and why it is important.
Proof of Keys day is celebrated every year on the birthday of the Genesis Block of Bitcoin, January 3rd. It is a day to drive awareness that cryptocurrency gives you the freedom to hold and transact without the need for a third party to provide custody and/or payment approvals. Many that are posting online about Proof of Keys day use the phrase, “Not your keys, not your crypto” to signify that you do not truly have ownership unless you control the private keys. Most people enter the cryptocurrency world through the portal of centralized exchanges, such as Coinbase, Binance, and others. This is an easy way for people to dip their toe into cryptocurrency investing and trading.
But Proof of Keys is about taking total control of your cryptocurrency. For many reasons we will discuss below, any cryptocurrency that you are not actively selling or trading should be moved off of these centralized exchanges onto wallets where you control the private keys. This gives you true ownership and control of your cryptocurrency. Be noted that these wallets, whether mobile hot wallets or cold storage hardware wallets cannot be reset by a customer service rep at the company that created it.
You have total custody and control, therefore, the backup seed phrase that you are given should be written down and stored someplace secure such as a safe. Storing them in multiple places are also suggested. These are the keys to restore access to your wallet if your device is lost or stolen.
For more information on types of wallets, click here and visit the tutorials section on Newscrypto platform where there is a short video on wallets.
Cryptocurrency is a beautiful decentralized creation that are open, borderles, neutral, censorship-resistant, and public, and by storing on a centralized exchange, you are negating all the features that make cryptocurrency great. There are some who feel there should be no one using them. But it is a necessary evil in today’s time where it is a way for beginners to begin to dip their toes in and learn about cryptocurrency. Decentralized options are emerging, but they are not user friendly and expect more developments to simplify the user interfaces over the next few years.
Now we will look at why centralized exchanges are not the best option to hold your cryptocurrency. Centralized exchanges provide an easy way to link a bank account or credit card. However, they do fall under the regulations and laws of the countries they are based in. If they are ordered to freeze or close an account of a particular account holder, they would be forced to comply. Many will argue that this is necessary if there is illegal activity, but what happens when the criminals are the ones in power giving those orders. Also, the requirements known as KYC, or Know Your Customer, again are another method that can exclude many that either do not have access to what is needed to qualify for an account or have the tools needed to access the account.
Also, centralized exchanges have been the targets of hackers in the past. Most major exchanges or those that acted quickly were able to recover from the losses incurred in the hack. But there are several instances where the exchange was insolvent after the attack and the account holders with them lost some if not all of their holdings. The most notorious was Mt. Gox, one of the first major exchanges that many people lost hundreds, and in some cases thousands of Bitcoin back in the early days of trading. There is still litigation going on to disperse the remaining Bitcoin held by Mt Gox. In 2018, Cryptopia was compromised and insolvent after a hack and the litigation for users to recover even partial funds that are left did not start until December 2020.
Another instance was not so much a hack, but the CEO of one of Canada’s largest crypto exchanges, QuadrigaCX supposedly died in 2019 as the sole person with access to the crypto held by the exchange. After investigation, it appeared that the exchange had been drained of the funds prior to his death. Users are left without any access or way to recover their funds held by the account. Centralized exchanges create a sort of honeypot for hackers. One centralized location where a massive amount of treasure can be stolen if one is to hack into their system.
Major exchanges such as Binance and Kucoin have also seen hacks, but were able to recover from the financial impact. This is another reason why it is important to move your cryptocurrency to wallets you control when you are not selling or trading them.
Crypto is designed to be a peer to peer system without the need for a middleman. You can transact freely with anyone in the world without any authority of power controlling you. Make sure to express your freedom in crypto by holding cryptocurrency on wallets where you control the private keys. If you know someone holding crypto on a centralized exchange, do not berate or belittle them. Take the time to congratulate them for starting their crypto journey, but then educate them on what they should do to take total control and ownership of their cryptocurrency. As more and more people flock to crypto with the attention on the current Bitcoin bull run and awareness of the rampant printing of fiat currencies around the world, be a force of change in helping them to understand how Bitcoin and crypto in general is not just about a speculative investment, but also it is a revolution of freedom.
Help others by sharing this information and all the Newscrypto platform and app have to offer with those you know. Education comes before adoption.
Content written by Blockchain Wayne and the Analyst Team at NewsCrypto
