Why Bitcoin Proponents Organized a “Bank Run” on Crypto Exchanges

The winter holiday season might be over, but Bitcoin The supporters had another interesting tradition to carry out. On Tuesday, they celebrated a unique, annual, mass celebration known as “Proof of the Keys,” which began in 2019. Bitcoin entrepreneur Trace Meyer.

In a practice roughly mirroring that of banking, the community is using today to encourage fellow Bitcoiners to withdraw their Bitcoins from exchanges and other third-party services in order to gain full ownership of their assets. The date was specifically chosen because it is the date of Bitcoin’s “genesis block”, the first Bitcoin block that was mined in 2009.

The philosophy of the day is simple: Many people put their Bitcoins (and other cryptocurrencies) on exchanges. However, they do not fully control their funds. Instead, they rely on exchanges.

“Not your keys, not your coins” is a common saying in the industry. (Or sometimes “not your keys, not your cheese.”)

Like the latest FTX disaster showed that third parties cannot always be trusted. FTX lost billions of dollars of users’ cryptocurrency-and exchange users don’t know when they’ll get their money back.

“Everyone should take advantage of Bitcoin’s most important property, its ability to protect itself! [January] The 3rd was a ‘Bitcoin celebration’ when we commemorated this important effort together,” said Rodolfo Novak, CEO and co-founder of Coinkite. Open the password.

He added that “self-defense has become so easy that now no one has an excuse.” hardware wallets (like the company COLDCARD), as a safe way to store their funds without the need for an exchange or other third party.

Lack of self-guardianship or self-control

A “bank run” brings to mind the Great Depression, where many anxious people lined up at their banks to withdraw their money, worried that their banks would be insolvent.

Keys’ evidence was not nearly as dramatic. But it’s a similar idea. A number of users on Twitter claimed to have withdrawn their money from the exchanges to set up new hardware wallets to secure their coins.

Hardware startup Foundation, self-service startup Casa, and others have hosted Twitter Spaces and offered tips on how to start the most secure self-hedging funds. The main recommendation was to keep the money in a wallet isolated from the internet to prevent it from being hacked remotely.

But much of the discussion revolved around what users were doing should not do. Novak cautioned against storing seed statements in the cloud. Justine Harper, Chainless’ vice president of business development, said “user error” and “overcomplication” are two of the main reasons people see themselves losing funds through self-monitoring.

For example, a user might read something about a more sophisticated self-monitoring mechanism on Twitter, but it would be too complicated a setup for them, the user would mess something up and lose their money.

Such an example reminds us of the risks of self-managed funds. Namely, losing Bitcoin keys (which essentially act as passwords) means losing Bitcoin forever. Just before the Proof of Keys “holiday”, veteran Bitcoin Core developer Luke Dashjr This was reported on Twitter said he lost millions of dollars worth of Bitcoins as a result of a hack.

Some have argued that if longtime Bitcoin developer Dashjr can’t even successfully manage their own Bitcoin, the average Joe has no hope.

Dashjr has yet to fully explain how it secures Bitcoin. But from what they shared, Dashjr might not have the best setup. His funds could be hot purse connected to the internet. This is rejected by security experts across the industry.

Like former Bitcoin Core contributor and maintainer Jonas Schnelli putInvoking acronyms like “Over-engineering and paranoid-complex levels can lead to vulnerability. Kiss your keys” and “Keep it Simple, Stupid.”

This highlights the importance of securely leveraging Bitcoin’s standard scaling best practices. For those who wish to participate, Open the password Whats up senior guide explains how to transfer funds to self-protection. In short, the industry standard has become to store funds because wallets are disconnected from the internet and cannot be hacked remotely.