The “Proof of Keys” Movement and Importance of Self Custody
You may have noticed crypto enthusiasts sporting “[Jan/3➞ 🔑]” (or other variants) in their Twitter profiles recently. For those unaware, this is in reference to the “Proof of Keys” movement started by crypto investor Trace Mayer in celebration of the 10th anniversary of Bitcoin’s genesis block on January 3rd, 2019.
The purpose of the movement is not only to highlight the “Not your keys, not your bitcoin” mantra of monetary sovereignty, but also to hold third-party services accountable by testing them for their solvency. While the movement is BTC-focused, we believe it equally applies to any digital asset where users can control the private keys.
While we admittedly have some reservations given the possible technical difficulties of a mass coordinated transfer event like this, we very much support users taking the time on a regular basis to verify that they can withdraw their digital assets from centralized exchanges and take actual possession by controlling the private keys to those funds.
How Does this apply to my funds on IDEX?
In short—it doesn’t!
As a non-custodial exchange, the private keys that control funds are never in IDEX’s possession. The end user is responsible for managing their keys and must use them to authorize any movement of their funds on the exchange. Additionally, all transactions are transparent and publicly verifiable on the blockchain.
By comparison, a centralized exchange requires you to send your cryptocurrency to a wallet that they control before you can trade. This creates a few problems.
- Makes them a target for hackers — pooling everybody’s funds into one system makes for an attractive target. In 2018, nearly $1B was stolen from exchanges [Forbes].
- Reduces transparency — when you hand over control of your funds you also lose visibility into their movement, trusting that the third party is acting in good faith. This is obviously not always the case.
Self-custody is one of the greatest benefits of blockchain, and it’s the main reason we built IDEX the way we did. Remember, if you don’t own your keys…you don’t own your crypto. Happy trading!
~Team IDEX (Aurora)
p.s. We highly recommend storing your digital assets on a hardware wallet such as the Ledger Nano S (purchased directly from the manufacturer) to ensure optimal security as your private keys are kept safe on an external, specialized chip that never connects to the internet.
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