Dug Campbell

Happy Tenth Birthday Bitcoin

I’ve written before about Bitcoin reaching a milestone birthday – three years ago on its sixth birthday and then for its (first!) tenth birthday back in November 2018. You see this sovereign, just like the Queen, has two birthdays – the date of the publication of the original White Paper and the date of the very first block that was mined (the Genesis Block).

You’ve got to admire the chutzpah of BitMex placing an advert on the front page of the very newspaper whose headline was embedded in the very first Bitcoin block that was ever mined.

On top of that, it’s worth taking note of the # proofofkeys campaign that’s being pushed across social media today as well. Fronted by well-known Bitcoin evangelist Trace Mayer, the Proof of Keys campaign aims to remind the many newcomers to the cryptocurrency scene that if you don’t have control of your private keys, you don’t have control of your money. Or to use their slogan:

“Not your keys; Not your bitcoin”

The reason that I, amongst many others, support this campaign is because it is a reminder to everyone not to lose sight of the reasons why Bitcoin is so powerful. It’s the hardest money that the world has ever seen. There is absolutely no way to inflate the monetary supply – and it has an existing money supply that can be publicly verified by anyone at any point in time. That’s a huge advantage over the previous hardest money the world had ever seen (i.e. gold). And that’s before you even start to build into that equation the values of divisibility, portability etc.

And yet. So many people these days rely on exchanges to store their funds – and the vast majority don’t realise that by doing so, they’ve given these third parties control of their funds. They no longer have any control whatsoever. It’s an incredibly worrying trend and, in some ways, far worse than simply relying on the current banking system – because so many have tasted monetary sovereignty only to sacrifice it once again at the altar of convenience.

So the Proof Of Funds campaign encourages everyone to withdraw their crypto holdings from exchanges today. For minimal transaction fees, the campaign urges you transfer any funds to an address that you control (i.e,. you physically hold the private key to that address). At that stage, you no longer have to trust that someone holds your bitcoin – because you have the mathematical means to do whatever you like with your funds.

The other major benefit of this (if done at scale) is that it stress-tests the exchanges. There’s no doubt that exchanges provide security and comfort for many around the world – but if this is your choice then you have to accept that you are inherently trusting a third party to be telling you the truth when it says that it holds the actual bitcoin behind the ledger entry on your account.

What’s to say that one (or more) of these exchanges have actually spent your bitcoin and are just giving you IOU’s that it hopes its customers will never redeem en masse?

Let’s see if any exchanges go down today. For those that didn’t live through Mt. Gox back in 2014, you’ll have to take the word of those that did at face value. It wasn’t a good time.

Let’s not do it again.