Originally Posted by Wiki on Alcohol Proof
This system dates to the 18th century, and perhaps earlier, when spirits were graded with gunpowder: a solution of water and alcohol "proved" itself when it could be poured on a pinch of gunpowder and still ignite the wet powder. If it didn't ignite, the solution had too much water in it and the proof was considered low. This process led to the nickname firewater, coined by Native Americans.
A "proven" solution was defined as 100 degrees proof (100°). This has since been found to occur at 57.15% ethanol. This is still used as the British definition. A simpler ratio to remember is 7:4 - 70° proof is 40% alcohol by volume.