Proof of Keys

The investor Trace Mayer proposed it for January 3, 2019, the anniversary of the genesis block mined on January 3, 2009. A promise you have never tested is not evidence of anything, and the cheapest way to test a custodian is to ask for your money on a day you chose in advance. Most participants find a fault in their own setup rather than at the exchange.

How it works

Proof of Keys has two halves, and the half about your own equipment is the one that finds faults.

The withdrawal. Move the full balance off every platform that holds coins for you, to addresses your own wallet generated. Do it in two steps: a small amount first, confirmed on chain, then the rest. Check the receiving address on the signing device's own screen, character by character at both ends, because malware that rewrites a clipboard cannot alter what a hardware wallet displays.

The restore. Take the seed phrase out of storage and rebuild the wallet from it on a spare device or a wiped one, then confirm the addresses match. A backup nobody has ever restored is a hypothesis. This step catches the common faults: a word written illegibly, a missing passphrase, a metal backup stamped in the wrong order, a device PIN nobody else in the household knows.

The cost is small and worth knowing in advance. A native SegWit withdrawal with one input and two outputs is billed as 141 virtual bytes, so at a calm rate of 5 sat/vB the network takes about 705 satoshis. What varies is the platform's own charge: exchanges publish flat withdrawal fees that are frequently several times the network cost, and some enforce daily limits that make a large withdrawal a multi-day exercise. Both numbers are in the exchange records on this site, and finding out on January 3 is better than finding out during a crisis.

Where you see it

Proof of Keys runs each January and is mostly self-organized, which is both its strength and its limit.

The date has a side effect worth planning around. If a large number of people withdraw on the same day, they compete for the same block space, and fee rates rise for everyone. Nothing stops you doing the drill on a quiet Tuesday in March instead. The value is in the repetition, not in the calendar.

There is also a fair criticism. A coordinated mass withdrawal is a bank run, and a solvent exchange with slow but honest processing can look guilty during one. That is worth holding alongside the counterargument: a custodian that cannot survive its customers asking for their coins was already insolvent, and the earlier that surfaces, the smaller the damage. Several of the platforms in our archive stopped processing withdrawals weeks before they admitted anything.

For an individual, the honest framing is narrower than the slogan. Your successful withdrawal proves the exchange could pay you, on that day, in that amount. It says nothing about the other customers. What it does prove, completely, is whether you can take custody of your own coins, which is the part you control.

Proof of Keys vs proof of reserves

Proof of Keys is something you do; proof of reserves is something the exchange publishes. The exchange's version is cryptographic evidence, a set of signed wallet addresses and a Merkle tree of customer balances, produced on the company's schedule and covering assets it chooses to include. Yours is an empirical test with a sample size of one: the coins either arrive in your wallet or they do not. The two answer different questions, and the reason to run the drill even at a venue with a clean attestation is that an attestation cannot tell you whether your own seed backup works.