Question 1

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

A public key refers to a key that protects the assets in a digital wallet. The keys allow users to access their wallets and take care of their cryptocurrencies. But, it does not allow the moving or usage of the currencies completely. For that, a private key is needed. Depending on the wallet used, the private key is either provided to the user or with the authorities.

The private key is the key that is supposed to be kept hidden at all times. If lost, all the assets will be lost immediately. There is no way of getting it back. So, if anyone wants to send a message, they will need the user's public key to send the message publically. Only the user will be able to access it using their private key. Without the private key, messages will not be able to be decrypted. The private key cannot be accessed using the public key but it can be done the other way around.

Custodial Wallet

In a custodial wallet, any crypto bought from and centralized exchange will be kept on the user's behalf. The private key will be provided and the assets will be accessed only using that. It is a risky place because centralized exchanges do get hacked often, so users can lose assets.

Non-Custodial Wallet

It is a type of wallet that stores the assets once the cryptos are bought through decentralized exchanges. Assets can be sent to another user using the private key. No third-party involvement is there in the whole process of the transactions and the keys are available only to the user. However, if the user loses their private keys they will lose their assets too, and no one will be able to retrieve them.

Question 2

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

It is an initiative that is prepared for newcomers to get awareness regarding their assets and how those assets should be held and why they should store their assets in a non-custodial wallet compared to custodial ones.

It is on the 3rd of January, and the main goal of celebrating this is to see if the centralized exchanges are working with transparency or not.

There are a few precautions to be taken by the users. Before users transfer their assets to a non-custodial wallet, the private key should be protected. Since the transfer can only be done if the private key is present. Secondly, the true memo should be used if needed. And lastly, the user must make sure to select the correct blockchain before transferring.

Question 3

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

In my point of view, for storing I prefer decentralized exchanges more than centralized ones.

• The first reason being, that storing assets in the non-custodial wallet is safer than other ones since the private key is only in the hands of the user and no other third party.
  -Secondly, usually, apps are provided for these platforms and access becomes quite easy for users.
• Hacking is a thing that is common in crypto platforms and it is very dangerous too. If a platform is hacked, all the users lose their assets and have no way of retrieving them again. Thus, non-custodial wallets are better since they are completely secure because only the user has the access to the wallet and no one else.

Question 4

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

TRANSFER OF STEEM FROM BINANCE WALLET TO STEEMIT WALLET:

• Open your Steem Wallet and check to see if your account is verified.

• Once your account is verified, go to the withdraw section by clicking it on the wallet on the bottom right corner.

• After that click on the currency, you want to send over or withdraw.

• Write the correct details of your account.

• Then confirm your order

• Using your account history, withdrawal can be confirmed.

TRANSFER OF TRX FROM BINANCE WALLET TO TRON LINK WALLET:

• Open the app and copy the address
  

• On the same website you do the same initial process but change on the coin. If done correctly, it will show something like this, where you again have to confirm your keys and the correct address.

• Then confirm the order.

• You can then go to the history to view the withdrawal.

Question 5

In one statement, what is the major significance of the transfers?

Its major significance is the fact that it shows the ease of using decentralized exchanges and the simplicity behind them. The platform does transparent work.

Conclusion

In conclusion, it was great homework that taught me a lot about decentralized exchanges and made my faith in them stronger. It also taught me not to blindly trust any feature any crypto platform provides without doing my research on it prior.