Proof of Keys- Steemit Crypto Academy- S4W7- Homework Post for @awesononso | by @benjamin09

지난달
Greetings friends and welcome to my homework task entry into the beginners dynamic course organized by Professor @awesononso in the Steemit Crypto Academy.

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Edited using Pixellab.

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

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Keys on a cryptocurrency blockchain refer to the pass that grants a user access to his account to perform transactions. With this in mind, there are two types of keys; private and public keys.

Private keys refer to the keys that grant the user the access to his assets in his account. With the private key, the user can access all coins in the wallet of the account. This means that, if a user has the private key of an account, he can perform all transactions with the coins such as transfer or withdraw. This keys are kept very personal and secret for this reason.

Public keys refer to the keys that grant the user, or any user the right to encrypt an account's wallet, but not decrypt it. With the public key, a user can only lock or encrypt the account's wallet, but not access the wallet's assets because it cannot decrypt or unlock the wallet.

Now that we know what public and private keys are, let us define them in relation to custodial and non-custodial wallets.

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- Custodial wallets.


Custodial wallets refer to wallets owned by a user but is being controlled by another user or third party. This means that the account owner has passed all rights of control over the wallet through the private keys to another entity. The third party now, has control over the wallet and can do whatsoever he pleases. This situation is a very risky situation to the account owner because, the custodian might default him, or even worse, the account might get hacked in case of centralization.

If the wallet custodian has only the public key, he cannot control the account's wallet. Rather, he can only encrypt the wallet. There is less risk here as only the account owner who has the private keys can actually control all assets in the account.
If the wallet's custodian has the wallet's private key, the custodian can do whatever he pleases with the account balance. This makes the risk of fraud very high.


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Edited using Pixellab.

- Non-custodian wallets.


Non-custodian wallets refer to wallets, where the owners of the wallets and accounts are the ones taking care of and controlling the wallet using the private key. With this type of situation, there is no risk involved as the custodian of the wallet is also the owner of the wallet. This situation is more preferable as the actions of the owner in controlling are not blamed on anyone but himself and in case of profits, he gets all the praise and profits.

In case of the use of public key, the user cannot access or decrypt the wallet. This makes the user to use the public key only for encrypting the wallet.
And in case of private key, the user/custodian can gain access to, or decrypt the wallet, thereby gaining all access to the account and it gives him the authority to process transactions with the wallet.

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

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What I think about the Proof of Keys Day.


Proof of keys day refer to a special day every year in the crypto world, on the 03rd of January where, investors withdraw their crypto assets from their centralized exchange wallet, to their decentralized exchange wallet. This day involves all crypto currencies and it was brought about in 2019 mainly for Bitcoin, but it has since then, evolved for all other cryptos.
This day is so special also, because it represents the day that the Bitcoin Genesis Block was mined. This Genesis Block, one could say that, it is the original block for all Crypto currencies because it is the first ever block to launch the Crypto currency world.
The Proof of Keys day, is also a great day because, with the transfer of funds from the centralized wallet to the decentralized wallet,

  • The user can make sure that the exchange network actually has the funds which they claim to have.
  • The user can be the owner of the crypto currency because he has the Private keys that gives the right to own and control the account assets.

What precautions would you take when participating?


When participating in the Proof of keys day, a user should take the following precautions.

  • Firstly, he should do ample research on the decentralized network which he wants to use because some exchange networks might be defaulting and not trustworthy. If he determines a trustworthy and verified decentralized network, he can now send his currency assets to the wallet.
  • Secondly and most important of all, the user should not make a mistake when inputting the wallet address because if the cryptos get sent to another wallet, that will be all about it. For there is no undo button in case of mistakes.
  • Lastly, after he has sent the crypto assets to his decentralized wallet, he should keep his keys very secure by sending them to his online drive or cloud, writing the keys down in a book and saving the keys on an external drive such as a USB flash drive.

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

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Storing crypto currencies could be made in either centralized or decentralized wallets. People have their various reasons for using any of them. But me, I prefer using the centralized wallet to store my assets or crypto currencies. My reasons why I prefer centralized wallets, are as follows.

  • With centralized wallets, you can easily trade or transfer your crypto currencies for other cryptos or even for fiat currencies. This makes trading possible as the market changes with price.
  • Since when using centralized wallets, we can trade crypto currencies for other currencies, traders can make profits with the currency in possession especially when price rises and they place good trades.
  • Also, I prefer centralized wallets because they are the ones in charge of holding the keys to the account and this helps several users who usually misplace or mistakenly share the keys with others. Thereby, keeping the account keys save and secure.

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

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So the following process is how I transferred my 21Steem from my Binance wallet to my Steem wallet.

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Before doing the withdrawal, I had a total of 24 Steem as my Steem balance. So, I decided to withdraw 22 Steem and send to my Steem wallet.

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After completing the transaction on Binance with network fee of 0.01 Steem, I had to wait for the confirmation.

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So after I finished with withdrawing from my Binance wallet, I now went to confirm it in my Steemit wallet.

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Screenshot source


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

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The following process entails how I withdrew 51 TRX from my Binance wallet into my TronLink wallet.


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Before the withdrawal, I had a TRX balance of 56 TRX. I decided to withdraw 52 TRX out from my Binance wallet.

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In order to finish the withdrawal, there was network charge of 0.99TRX.

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We all can clearly see the confirmations of the transaction from both the Binance wallet, and the Tronlink wallet.

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

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The major significance from the trading in the above question 4, is to give a test drive for the Proof of keys day by withdrawing most of my Steem and Tron balance from my Binance centralized wallet, to my Steemit and TronLink wallet which are both decentralized wallets.


All screenshots for questions four(4) are taken from the Binance application and from the Tronlink application on my mobile phone. Unless otherwise stated.


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Conclusion.

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After the completion of this homework post, I have learned about Proof of Keys day and also, had a hands on experience of Proof of Keys day by withdrawing my Steem and Tron from my centralized exchange Binance, to my decentralized exchange wallet here on Steemit. Also, I have also learned about the differences between custodial wallets and non-custodial wallets.


Thank you for reading.

Cc @awesononso

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Hello @benjamin09,
Thank you for taking interest in this class. Your grades are as follows:

CriteriaCalculation
Presentation/Use of Markdowns1.5/2
Compliance with Topic1.5/2
Quality of Analysis & Practical Approach1.3/2
Clarity of Language1.3/1.5
Originality & Expression1.2/1.5
#club50500/1
Total6.8/10

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The following caught my attention:

With the public key, a user can only lock or encrypt the account's wallet,

The wallet is not encrypted but the funds are.

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Feedback and Suggestions
  • You did not properly get the explanation of public keys.

  • You did not properly get the idea in question 5.

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Thanks again as we anticipate your participation in the next class.

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Thank you prof

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Sir I am part of #club5050.