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Hello Steemians!

I hope you are doing well in your life. I hope you are keeping your health in this pandemic as first priority. So this is my homework post for @awesononso. The topic today is Proof of Keys. So, let's get started.

INTRODUCTION:

You keep your money in the bank and they provide you with some kind of password or a special type of card with a 4-pin password that can't be accessed by anyone except you. Well, what I'm trying to imply here is that when we talk about keeping money safe and making transactions and etc., we need to be careful with these things. We have to keep our wallets safe, we have to keep our passwords and those cards safe. The concept of keeping your money safe applies everywhere, and if you ask me it is of much more importance in the digital world as compared to the real world because of the high possibility of hacks and other means of piracy in this world. When we talk about digital currencies it is done by the means of keys namely public and private keys and there is a concept behind them called "cryptography" which means to transfer messages, funds etc., with extreme security and with the pair of keys and a process which only the person intended to receive it will receive it. With relation to it we'll be discussing our topic today which relates to keys/passwords, cryptography, wallets etc., and to sum up it's about "Security".

QUESTION 01

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

ANSWER:

To answer the above given question we need to understand what are public key cryptography is and what are custodial and non-custodial wallets. So, let's dive deeper as we understand the following and very basic terminologies regarding the cryptocurrency world.

Public Key Cryptography

"Public key cryptography "is a concept which is used for the safe encryption and decryption of coins or funds between the two users or more specifically their wallets. It involves a pair of keys namely the "public and private keys" to execute this whole process, each user has a crypto wallet with these two types of keys provided with it.

"Public key" is a key which as the name implies itself can be accessed and share with the public. When we send some funds using a public key of the recipient, we are basically encrypting / locking the funds or data or coins inside the recipient's wallets and then it can't be accessed or decrypted by anyone except the recipient himself, which is where the second part of the cryptography phenomena helps namely the "private key".

"Private key" is the pair of the public key and must be kept private unlike the public key. It is the most important key when we talk about secrecy and security and must not be shared with anyone in order to avoid potential hacks and frauds. A private key being a unique pair of the public key decrypts or unlocks the data that is locked or encrypted by a public key. And only the user having it can do so. This makes the cryptography fool proof and the most secure when it comes to keeping your funds safe but it all relies on keeping your private key safe somewhere.

_source

Take for example a letter box outside your house. Everyone can drop in letters in it which acts as a public key here but not everyone can open the letter box as the key to its lock lies in the hand of the owner. Only he can open it with his key which in this relation acts as a private key. Now, only the owner has the access of all the letters and only he can read them.

Private and Public Keys in relation to Custodial Wallets

"Custodial wallets" are the ones in which the wallet or your private key is in the custody of a third party or an intermediary. In these types of wallets your private key is being controlled and can be looked upon by the central body that is in custody of your wallet. These types of wallets are mostly of the centralized exchanges where you keep your funds. The exchanges can do anything with your funds without your consent and the basic issue with centralized finance is this one. It serves as a core reason why the development of digital currency first came into being. The banks run on the similar concept of centralized finance where your funds are in the custody of another entity and they can do whatever they want without you knowing anything about it. They can invest your funds elsewhere and keep you in the dark as they have the access to your wallet's private key and the public key being public serves as your account number by which anyone can transfer the funds using it.

The above given example in this case can be bent like,
In the case of custodial wallets, the centralized bodies in custody of your private key serves as a post office. Now, your house address may serve as your public key as everyone has it and can send posts using it to the post office. Now, the post office has the access to all of your letters and they have your private key. They can keep you in the dark and anything can happen to your posts and they can choose to not tell you about it.

This centralized body being in the custody of your funds and your wallet / private key is much more exposed and vulnerable to hacks and frauds too.

Private and Public Keys in relation to Non-Custodial Wallets

"Non-custodial wallets" are the ones in which you have direct access to your wallets and your private key and no intermediary party is involved and has custody of either of the two things. You can use, deposit, withdraw and exchange or transact your funds whenever and wherever you want using your public and private keys.

These types of wallets are much more efficient and effective when it comes to security and independence.

QUESTION 02

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

ANSWER:

Opinion on Proof Of Keys Day

• The proof of keys day is celebrated on the 3rd of January. It was an idea presented in 2019 to remind the centralized exchanges and wallets that they may be the custodians of our funds but they are not the authority and we can use our financial assets wherever and whenever we want.

• The proof of keys day acts in a way a bank run in real world would that is a large number of people who have their funds stored there out of fear that there is something fishy happening with there assets, withdraw their money at once which causes banks to run short on money and cause problems like bankruptcy except the proof of keys day isn't intended to destroy the centralized exchanges or anything but it is to remind them that they must keep a record and full transparency towards their users as they are the owner of their funds and the whole purpose behind the cryptographic concepts is to achieve financial freedom.

• Proof of keys day is celebrated on the day when the genesis block of Bitcoin was mined.

• I think it is a brilliant and a fun concept and provides a real world touch to this ever increasing and ever developing community of cryptocurrency by serving as a holiday and providing the community a chance to show their power as a whole. It also enlightens the true purpose of digital financial assets which is to provide transparency and finncial freedom to the users.

Precautions

Although "Proof of keys" day is a brilliant crypto holiday, there are some precautions that a user must take before participating and they are,

• Keep the keys safe to avoid frauds and scams. As is is said, "Not your keys, not your coins".

• When moving your funds from centralized exchanges and wallets, always choose a reputable and a good decentralized wallet to keep your funds in. The ones that provide full transparency and freedom to use your coins.

QUESTION 03

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

ANSWER:

Decentralized Wallets Over Centralized Wallets / Exchanges

I prefer decentralized wallets over centralized exchanges for obvious and previously stated reasons. Decentralized wallets provide the users with more financial freedom and doesn't interfere in the exchanging of the funds and and provide a chance to self manage your assets and use them as you want. Metamask, Tron, Steemit wallet are some of the types of brilliant decentralized wallets that provides the users a chance to do as they please with their money and provides security and immunity to scams and online frauds as they private key is only in the possession of the owner. Below are some reasons why I personally choose decentralized wallets over centralzed ones.

• Complete transparency, self management and freedom to use my assets.

• Easy deposit and withdrawals.

• Serves the basic purpose of a cryptographic environment.

• Ownership of the private key.

• Extreme security and immunity to hacks and scams as there is no central body in control.

Decentralized are the best when it comes to the above stated reasons but there are some precautions that you must take when using one. With the first one being keeping a check on your private key if it is safe or not, incase you lose your private key no one can recover your funds and all of your funds will be gone. So, if you are new to this De-fi world it is always safe to first practice on centralized exchanges and then move to De-fi ones.

QUESTION 04

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).

ANSWER:

For the sake of answering the question, let's assume it is the proof of keys day and we are transferring our funds from Binance to a decentralized wallet which in this case in Steemit Wallet.

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

• *Step no. 01_ - Open Binance on your mobile phone or on your desktop and go to the * - Open Binance on your mobile phone or on your desktop and go to the "spot wallet", then select "Steem"

_{screenshot taken from Binance}

• *Step no. 02_ - Select withdrawal and then fill out the **address name - Select withdrawal and then fill out the *address name, **the network type (steem), *memo (which you'll copy from your Steemit wallet) and the amount you want to transfer. And click on withdrawal then. Binance will ask for confirmation and will just take some moments to transfer the funds.

_{screenshot taken from Binance}

• Step no. 03 - After that a confirmation of your transfer to another wallet from Binance will pop up confirming your withdrawal.

_{screenshot taken from Binance}

• *Step no. 04_ - Now check your * - Now check your "Steemit Wallet" if the funds have been transferred to it or not.

_{screenshot from Steemit Wallet}

b.) Transfer at least 50 TRX from your Binance wallet to your TronLink wallet.

• *Step no. 01_ - Open Binance on your mobile phone or on your desktop and go to the * - Open Binance on your mobile phone or on your desktop and go to the "spot wallet", then select "Tron" and click on "withdrawal"

_{screenshot taken from Binance}

• *Step no. 02_ - Fill out the **address - Fill out the address which you've copied, *the network type (TRC20), the *amount you want to transfer. And click on withdrawal then.

_{screenshot taken from Binance}

• Step no. 03 - Binance will ask for confirmation and will just take some moments to transfer the funds.

_{screenshot taken from Binance}

• *Step no. 04_ - Now check your * - Now check your "Wallet" where you've transferred the funds if they are transferred or not.

_{screenshot from Steemit Wallet}

- Here is the transfer history of both Steem and Tron from Binance.

_{screenshot taken from Binance}

And I've made sure that I have both my private and public keys safe.

QUESTION 05

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

ANSWER:

The major significance of transferring my funds was to keep them safe of all types of possible scams, frauds and attacks that can happen on the centralized bodies and to serve the absolute purpose of cryptocurrency that is to achieve complete transparency and financial freedom.

CONCLUSION

From this lesson we learned the cryptographic function of the keys and how they work and what each of the key's purpose is, the encryption and decryption of funds, the significance of the crypto holiday namely "Proof of Keys" and the purpose behind it. Also the freedom from centralized bodies and exchanges and complete transparency of our digital money.

That was all for today. Thank you for reading through.

cc; @awesononso