Homework Question

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

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

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

• Let us assume it is Proof of Keys Day:
• Transfer at least 20 Steem from your Binance wallet to your Steemit wallet.
• Transfer at least 50 TRX from your Binance wallet to your TronLink wallet.
  (Provide Screenshots and make sure you have your Keys).

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

Introduction

Good Day Steemians , I will be responding to assignment given by professor @awesononso Thank you for this wonderful topic which is base on the "PROOF OF KEYS", their is need to understand what proof of keys is all about.

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

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

What is a public key?
In crypto, public key is a large number that is used to encode data. It is being generated by a software program, it is provided by a trusted authority and also made available to everyone .

A public key is also used to encode a message. It is accompanied by a corresponding private key, which is known only to its owner.

Private keys are used to decode messages that were created with the corresponding public key In Summary, a public key locks up data from unauthorized user while private key is use to unlock it.

While comparing Custodial and non-custodial wallets the first thing you need to look at is who holds the private key because custodial literary mean taking looking after something.

Custodial wallet is the type of digital wallet that keeps a user’s private keys and provide security and backup their assets. Custodial Wallet save trader's private keys on their end so that they can have full control of everything which makes it centralized in nature and the public key is simply the custodial wallet address.

In Custodial wallets the private key stays with the third party that oversee and manage it . The activity performed with the key is completely managed by a third party.

Example of Custodial Wallet that oversees user private key includes; Binance, BitMex, Bitgo, Blockchain.com, Free Wallet

While for non-custodial wallet it is a decentralized wallet where no third party is in custody of private key except the user who has the full control of his/her private keys. on creation of non custodial wallet the user receives a file which contain their private keys and they need to write it down the mnemonic phrase which will be enable them have full control to their funds. The user is responsible for any thing that happens to the key.

Example of Non Custodial Wallet that oversees user private key includes;, Exodus, Ledger Nano X, Electrum, Trezor One, Zengo, Wasabi, among others

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

Proof of keys day is actually an annual event that was integrated on 3rd January 2009 by Trace Mayer. The movement was started to persuade traders to transfer their cryptos off of exchanges like Coinbase, Binance, etc. and move it into into a Bitcoin wallet where they can have full control over the private keys.

Proof of keys day was initiated to make trader or investors understand that cryptocurrency saved on an exchange platform is basically or technically owned by the exchange because since the exchange has full access and right over the private keys they have the ability to manipulate the wallets and the crypto saved in them.

Proof of Keys is attempting to replace the idea of a middle man or third party which is liable to vulnerabilities and mistakes by convincing traders to transfer their crypto to a wallet and in doing so they tend to achieve the following things;

• Give them the opportunity to learn how to create a Bitcoin wallets.
• Remind traders that they own their asset once they have the full control of their private keys.
• For Trader to know what it truly means to control your wallet.
• To check whether if centralized exchange are functioning perfectly well.

WHAT PRECAUTIONS, WILL I TAKE WHILE PARTICIPATING IN IT?

Before I can participate in proof of key day their are some basic precaution I need checkmate before I transfer my asset to a non-custodial wallet .

• I will make sure I save my private key to the wallet where it can be retrieved easily because once the assets is moved to a non-custodial wallet and I don't have the private key, it automatically means am loosing my Crypto-asset because my private key is what grants me access to my wallet.
• I will make sure I have my private key of my non-custodial wallet with me while transferring asset.
• I will make sure I make no mistake in the memo or the address.

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

A centralized Exchange wallet is the type of Exchange wallet which is being manage and owned by private individual or Government. There is a central authority that control the activity of the users. In centralized exchange wallet the users doesn't have full control of their personal wallet because the owners of the platform have limited them thus it is insecure.In Centralized Wallet virtually all the details of the user is online.

While Decentralized exchange wallet is not controlled by any central authority or group of persons .it allows the trader to oversees the everything without any consultation from a third-party or central authority.

I trade with Centralized wallet but if I want to store my crypto, I will choose Decentralized over Centralized wallet below is the the reason;

• Staving crypto-assets in Decentralized wallet is safe because I will be the controller of my private key ,their is no third party or middle man.
• Decentralized Wallets is not pron to break into compare to centralized exchanges wallets can be easily hacked.
• Decentralized wallets are fully decentralized and it doesn't make use of a central server which when affected the whole system will be down in the case of Centralized Wallet .

• Let us assume it is Proof of Keys Day:
• Transfer at least 20 Steem from your Binance wallet to your Steemit wallet.
• Transfer at least 50 TRX from your Binance wallet to your TronLink wallet.
  (Provide Screenshots and make sure you have your Keys).

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

• Step 1 ;
  Go to your Steem wallet to get your steemit info and as you the balance was 24.705 steem before the transaction.

• Step 2;
  I login into my Binance account and then I Click on the spot wallet

• Step 3;
  I click on the coin (steem) I want to transfer and I click over it, and I clicked on withdrawal.

• Step 4;
  Paste your steemit ID, choose amount of Steem you want to withdraw, since their is no memo leave the memo blank and then Click on withdrawal.

• Step 5;
  A page will pop asking you to Confirm the withdrawal , Click on confirm

• Step 6;
  Enter the OPT got on your mobile phone and email and then click submit to process the transaction and the image was taken with another phone because you can't screenshoot it .

• Step 7 ;
  Check on the steemit wallet to if you received steem and as you can see from the below screenshoot the steem is now in my steemit wallet.

TRANSFER OF TRX FROM BINANCE TO TRONLINK WALLET

• Step 1;
  I log into my Tronlink wallet and copy my public wallet address.

• Step 2;
  I login into my Binance account and then I Click on the spot wallet

• Step 3
  I will click Tron which is the coin I want to send and click over it,and click on withdrawal

• Step 4;
  Paste your Tronlink wallet address, choose network and amount of TRX you want to withdraw. - Click on withdrawal.

• Step 5;
  A page will pop asking you to Confirm the withdrawal , Click on confirm

• Step 6 ;
  Enter the OPT got on your mobile phone and email and then click submit to process the transaction and the image was taken with another phone because you can't screenshoot it .

• Step 7 ;
  Check on the Tronlink wallet to check if you received tron and as you can see from the below screenshoot the tron is now in my tron wallet.

Note; 1TRX was deducted as transaction fee

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

From the transaction performed above, I easily transfer my Steem and TRX to my tronlink wallet and my steem wallet without any interference simply because i still have my private key at my disposal, the evidence of this transaction is to show the importance of private key in blockchain whether centralized or decentralized.

Conclusion

The important of keys in blockchain system not be over emphasis .Thank you Professor @awesononso, for this wonderful lecture your contributions to crypto academy is awesome.