Not Your Keys, Not Your Coins #Proofofkeys
Not Your Keys, Not Your Crypto
November 15 2021
The best way to store your private keys
Keeping your private keys safe, secure and under your complete control is essential to ensure financial independence and autonomy, which is what attracted a lot of early crypto adopters and remains a key value in the crypto community. In addition to empowering monetary sovereignty, it also serves as a way to hold third-party services accountable by testing them for their solvency.
Proof of Solvency
Purchasing a digital asset means you're buying a key that represents ownership of such value. Requesting proof of that key is a useful method to determine potential risk with exchanges and other digital custodians. Exchanges are suspected of not holding onto the coins and actually failing to carry sufficient reserves. There's also the possibility that the exchange or wallet provider becomes insolvent, has its accounts frozen, or pulls a salacious exit scam. If a large enough volume of crypto is moved by a significant portion of asset holders, custodians are challenged to prove they can accommodate users' demands for ownership of their coins.
Recently, BitUniverse released an Exchange Transparent Balance Rank feature, which aggregates trading volume for the top 60 cryptocurrency exchanges. According to the list, the world's most popular centralized exchanges store at least 1.9 million BTC ($13.9 billion).
Research from Viewbase shows a similar ranking of leading exchanges for reported monthly trading volumes and ether balances.
The ability to verify the activity by these entities is the accountability that is built into blockchain technology, one of the greatest aspects of the technology. It is extremely important to pay attention to this due diligence because a huge disparity between the crypto balances and transaction activity can indicate foul play; in fact, 95% of total volume reported is faked according to a report by BitWise Asset Management.
While regulators are getting stricter, there is still a real lack of protection for exchange users whose funds may be exposed to hacks. In the event that a less-than-desirable event like a hack or fraud happens to the service you keep your crypto on, you may have no way of getting it back. But even custodians like Coinbase and Bakkt have full control of the coins and can refuse or limit withdrawals. Smaller exchanges have made no commitment to any safety standards.
With crypto, long time holders are reminded to be mindful of who truly owns the private keys, and those who are new investors should also be aware of the importance of moving coins away from the initial institution where they bought them. With crypto — you become the single point of failure — since you own the keys — — if you delegate the keys — you are increasing the risk. Make sure your keys are backed up elsewhere — the default is paper, but there are new solutions that enable you to encrypt your paper backups so that you always retain access to your assets.
About the Author:
Kyle Graden is a digital native who was born in what's considered the Millennial Generation. Kyle is a nomadic entrepreneur, growth consultant, and QryptoQueer, striving to make a more accountable, transparent, and equitable world. Kyle's experience in the blockchain and cryptocurrency industry spans from marketing a crypto hedge fund to being named to the Top 100 Fintech for UN SDG Influencers list to speaking at conferences and participating in hackathons.
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Vault12 Digital Inheritance is the first solution to deliver an effortless and secure method for transferring a variety of digital assets — including Bitcoin (BTC), Ethereum (ETH), other cryptocurrencies, and data — to future generations.
This innovative system enables users to appoint either a person or a mobile device as a guardian. The designated guardian is entrusted to protect the user's comprehensive collection of digital assets, encompassing seed phrases, private keys, and other confidential information, safely stored within a decentralized digital Vault.
This process not only mitigates potential risks but also removes the necessity for regularly revising asset inventories or modifying instructions, which often leads to breaches in privacy.
Designed to be used alongside traditional hardware, software, and online wallets, Vault12 Guard helps cryptocurrency owners, safeguard their digital assets without storing anything in the cloud or in fact, any one single location. This increases protection and decreases the risks of loss.
Note:The Vault12 Guard app is not a crypto wallet and does not hold cryptocurrency. Using a non-custodial approach, a digital Vault safeguards your Bitcoin or Ethereum wallet seed phrases, private keys, and other essential data.
The Vault12 Guard app enables secure decentralized backups and provides inheritance for all your digital assets, including Bitcoin, Ethereum, crypto wallets, and other digital data.
Whether your digital art is suitable for a phone, or represents much higher resolution multimedia, make sure that you have backed up a copy in case the resource link is disrupted in the future. Digital art can easily be added to the Vault either via the mobile app or via the desktop utility. Once you have stored your artwork in your Vault, it will also benefit from inheritance once you activate that in your app.
Whether you are at home or away, make sure that essential data about your home and family - including IDs, medical records, insurance information and home safe combinations - is backed up and available at your finger tips.
With a secure decentralized backup Vault, you can ensure that, in any event, you always have access to important information, wherever you are.