Proof of Keys with Trace Mayer

In this episode of the CRYPTO 101 podcast, Matthew had the chance to talk with creator of the ‘Bitcoin Knowledge’ podcast and crypto veteran, Trace Mayer

Who is Trace Mayer?

Trace familiarised himself with digital currencies in his middle-school years, selling video game currencies to his friends. He had taught himself Austrian economics early (you had to be self-taught because the status quo was and still is Keynesian) and partly as a result of this he got involved in bitcoin at an incredibly early moment in the movement.

Trace is not your average crypto hype investor. He has has been around for quite some time and has stuck around for philosophical reasons.

“For me it’s not about just making a quick buck. I am here for the long term, I am here about taking territory of monetary sovereignty. I am here about distributing the keys of wealth.”

Trace has a history of growing and developing the Bitcoin space for a lot longer than most of us have been involved. Due to his commitment to actually owning the assets he was invested in — and noticing some limitations in the private key security of the early Bitcoin code — he funded Armoury, a Bitcoin cold storage solution. He also realised that an exchange was necessary for wider adoption — this led him to fund the Kraken Exchange. Then he funded Bitpay because they were focused on merchant processing, something many Bitcoiners believe is an essential step for wider adoption.

What is Monetary Sovereignty

Trace gives a brief description:

“You need to have something that is limited in amount, so you can’t have it confiscated through inflation — which is a form of taxation without representation. It needs to be censorship resistant — meaning you can interact with it.”

Can your money be printed into existence? Can your holdings of that money be kept from you for one reason or another? Then you do not have monetary sovereignty.

Trace Mayer

What is ‘Proof of Keys’?

First, check out this website Trace has set up to explain the philosophy. In essence it is very simple. On January 3rd (The original Bitcoin launch date) every year people are encouraged to take any crypto assets they own from any third party platforms — exchanges, gambling sites, etc. and put them on a storage device where they personally own and hold the private keys. It is essentially a ‘bank run’ on third party platforms.

The benefits of this are twofold: 1) it gives people the experience and knowledge of withdrawing and moving their assets to a location where they truly own it. 2) if people run into resistance they will learn which platforms are not to be trusted when it comes to believing they are holding your assets at your discretion only.

“People might have sent bitcoins to all different types of services. They might have forgotten that they have sent Bitcoin to all these places. It might only be a little bit, but if on an annual basis you are going around and cleaning up all these bitcoins that are in the couch cushions, that can make a big difference if Bitcoin goes up a significant amount. This is also just Bitcoin hygiene in general, to just constantly be cleaning up that dust. ”

Are Coinbase and other platforms inherently untrustworthy?

Not necessarily but Trace makes the point that the burden of proof is on the platform. It is their responsibility to prove to the user that they are trustworthy. And with crypto assets it is incredibly easy to display trustworthiness — it can be done on the blockchain. If your assets can’t or won’t be moved to an address to which you own the private keys are your request, they have failed to showcase any trustworthiness.

“During the bear markets, this is a perfect time for these companies to be burning money on salaries and pay rolls, and then customer deposits get very tempting to dip into so that you don’t go bankrupt or so that you don’t have to lay off staff. Then it becomes like a drug and you can’t get off of it. Then when the price starts to run, they are short a significant amount of Bitcoin. Why even give them the option? Why take that risk when you don't have to?”

What is the Myer Multiple?

There is a price metric that has been named after Trace Mayer, it is called the Mayer Multiple and is quite simple to understand.

The Mayer principle is simply the number of times Bitcoin’s current price is higher than the 200 day moving average. For example. If the 200 day moving average was $1000 and the current trading price was $3000 then the Mayer Multiple is 3 because Bitcoin’s price is 3 times higher than the 200 day moving average.

The interesting thing about the Mayer Multiple is that historically, the average mayer multiple is 1.4 and statistically accumulating Bitcoin at a Mayer Multiple below 2.4 has been fruitful.

The Mayer Multiple at the time of writing is 0.6.

The Future?

So what does Trace think the future may hold?

“I think humanity's future is tied to Bitcoin because Bitcoin is now the hardest, soundest money that this planet has ever seen. This is not just a once in a lifetime, this is a once in a species opportunity because we have created triple entry bookkeeping with distributed consensus. Whoever adopts the hardest, soundest money first, they are the ones who are going to benefit from that technological revolution that happens in money.”

Final Advice?

Trace had some final advice for all the listeners, and it was as predictable as it was simple.