Steemit Crypto Academy [Beginners' Level] | Season 4 Week 7 | Proof of Keys

Hello fellows. How are you all?

This is @ahtishamghumman5, here I am going to share my homework post on the topic " Proof of Keys" given by respected professor @awesononso

Introduction

Before getting straight to the questions, let me give you a brief overview of what I will cover today. I will be discussing keys and how they are linked to cryptocurrency. In addition, the concept of proof keys day and how to transfer assets from centralized wallets to decentralized ones.

So, let’s dive into the plethora of cryptocurrencies.

Source

1.)Explain private and public Keys in relation to custodial and non-custodial wallets.

Private and public keys secure the cryptocurrency assets. People related to the cryptocurrency world know what blockchain network is. cryptography backs up the blockchain network.

Cryptography has two methods to secure crypto assets in the cryptocurrency market.

• Public key or asymmetric cryptography (it involves a pair of keys).

• Private key

A public key

key is displayed in public, as the name itself implies. It works with a pair of keys. Whenever a coin or an asset is displayed in public, this key can encrypt it and lock that coin in the wallet.

In simple words, a public key is the address of the user’s wallet that is used to send secret messages. The user can only encrypt the message.

The user only knows a private key

This key should be kept secret as only the user has access to it. The user owning a private key can transfer the assets quickly and has access to its wallet. The investments directly link with the private key. Once you lose your private key, you will lose all the assets you own immediately.

Custodial and Non-custodial wallets

Custodial and non-custodial wallets links with the private key to function. I will explain both of them separately in context with the private key.

Custodial

wallets are centralized exchanges. These wallets are controlled by an external force (third party). Consider a child owns $40 (gift), and the child's mother keeps that money and can use that money according to her likes. Although these $40 are the child's money but controlled by the mother (third party). The same is the case with custodial wallets.

The banks control the money and can even transfer the funds without telling the owner about it. In short, the private key can control the custodial wallet, and a third party owns the private key.

Non-custodial

wallets are as simple as the normal ones, where the owner has access to it only. The user controls the private key, and only he/she can transfer the funds or assets without involving any external party.

These wallets are decentralized ones.

What do you think about the Proof of Keys Day? What precautions would you take when participating?

I think the proof of keys is a great initiative to remind and sensitize the user to control their funds. On this day, all the users withdraw their assets simultaneously and store them in the decentralized wallets.

This event takes place on 3rd January every year. Proof of keys day holds a special place in the cryptocurrency world as the first bitcoin was mined today. You can relate to this day as the crypto bank run, where all the users store their assets in non-custodial wallets (decentralized exchanges).

The goal of this day is to check whether the centralized exchanges are working transparently or not. However, there are some precautions one should know before participating in this event.

• One should make sure to have a private key to transfer the assets to the non-custodial wallets.

• One should enter the right wallet’s address as these addresses are different for every blockchain.

• Chances of risks are high so, don’t involve yourself in something you can’t take the risk of.

• One should enter the correct memo before transferring the funds.

Do you prefer Centralized exchanges or Decentralized wallets for storing your cryptocurrencies? Why?

I will prefer decentralized wallets over centralized exchanges for storing my cryptocurrencies. Non-custodial wallets (decentralized wallets) are safer as compared to the centralized ones. Here are the causes why I prefer non-custodial wallets.

• Non-custodial wallets allow only the owner to have access to it without involving the third party in it.

• Private keys are only controlled by the users in non-custodial wallets whereas, custodial wallets are controlled by the banks or external party.

• The chances of hacking are almost impossible in non-custodial wallets.

• The user can have total privacy in non-custodial wallets as compared to the centralized exchanges.

• Although buying and selling the crypto assets is easy in centralized wallets (CEX) but in decentralized wallets, buying and selling is safer.

• The owner is only responsible for the transactions and transfer of funds and no other party controls the private key.

4.)Let us assume it is Proof of Keys Day

a.) Transfer at least 20 Steem from your Binance wallet to your Steemit wallet.

As it is the proof of keys day and I will be transferring my Steem coins from centralized exchange to the decentralized wallet (Steemit wallet)

To transfer the coins, you need to visit the Steem wallet to copy the address of it and then visit the Binance wallet and select the Steem coins from there.

Enter the amount you need to withdraw and click the withdraw option. Paste the copied address and select the network and again click on the withdraw option. A confirmation page will appear, fill that form and verify the transaction process.

After a while, you will get notification on your Steemit wallet about the assets transferred.

b.) Transfer at least 50 TRX from your Binance wallet to your Tron Link wallet.(Provide Screenshots and make sure you have your Keys).

• Open your Tron link wallet and copy the address.

• Visit the Binance platform and select the Tron coins from there.

• Select the Tron coins and withdraw them.

• Select the amount of Tron coins you need to extract and withdraw the.

• Fill the confirmation form.

• Verify the transaction process.

• You will get notified by your Tron Link wallet when the amount will be received.

5.) In one statement, what is the major significance of the transfers in question 4.

As you can look in the above question, I have successfully transferred the coins from centralized exchanges to decentralized wallets (non-custodial). It indicates that the cash I moved are mines, and the centralized exchange (Binance) works transparently.

If the Binance exchange were not working, then the transfer wouldn’t be possible.

Conclusion

Keys are used to transfer and secure crypto assets. Moreover, a day is celebrated to take control over the funds called proof of keys day.

From this lecture, I learned about these points and how much they mean in the cryptocurrency world. I want to thank sir, for allowing me to know a lot from this piece of information. I am looking forward to learning more from you about cryptocurrency and everything related to it.