Hi everyone! This time I want to try to participate in a task given by professor @awesononso from the Steemit Crypto Academy community. The professor gave several questions related to about Proof of Keys.

Question 1

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

Source

We know that every transaction that we make on a blockchain network will be stored in a block and the data from the transaction will be hidden by being encrypted using a unique code mixed with numbers and letters so that it cannot be seen or misused by irresponsible parties. This unique is called Hash. Then so that the data can be encrypted, then there is a tool that will be used as an encrypter and that is called Public Key.

The public key usually doesn't have to be kept very tightly because this key is shown to the public and he doesn't have any access to a wallet in terms of sending a cryptocurrency, there are even some wallets that use the public key as the address of a wallet to send it to the wallet, for example like TronLink Wallet on the Tron Blockchain.

Then besides the Public Key, there is one more type of key that is in the cryptocurrency wallet, namely Private Key. This key is the core key of a person's wallet, if he loses this key he must be prepared to lose his crypto assets.

However, there is one very important point which is the main use of the Private Key. If the Public Key is a key that is used to encrypt the data in a block, then the Private Key is a key that is used to convert the encrypted data back into a unique code back into text that can be read by the person making the transaction.

Source

By combining these two keys, the peer-to-peer process on the blockchain network has a very high level of security. Every transaction data made will always be encrypted by the Public Key so that it cannot be read other than the holder of the Private Key who is able to open the encryption of the transaction data.

Every key that I discussed earlier is already in every wallet, so we no longer need to enter the Private and Public Key every time we make a transaction. But we need to know that someone's ownership of the wallet he has can be different. This depends on the type of wallet he uses, the types of wallets I mean are Custodial and Non-Custodial Wallets.

Source

Custodial Wallet is a type of wallet where the two keys in the wallet are handed over to a third party. In Custodial Wallet, if we are going to make a transaction then the party who will do it for us, so that he will have access to the Private Key which will be able to open the encryption of the transaction data that we do. So we can conclude that this type of wallet is the same wallet as the current banking system where the bank can see in real-time all the transactions we make.

Then there is another type of wallet called Non-Custodial Wallet, this type of wallet is a wallet where the Private Key from the user is not handed over to any party, so that the owner of the wallet is the one who has full control over the Private Key. This is what makes a Non-Custodial Wallet different from a Custodial Wallet, by not giving Private Key access to any party, the owners of this type of wallet have full rights to the assets that he owns and the owner can also get privacy where no one who can peek at the contents of the wallet and the transactions he does and this is the actual application of the Decentralized System.

Question 2

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

Source

Proof of Keys days is a unique event and may only be done in the cryptocurrency world. This event is an event where most people move their crypto assets on the Centralized Exchange to their personal wallets. This event was originally held on January 3, 2019 as well as to commemorate the day of the creation of the Bitcoin Block Genesis which is the first genesis block in the cryptocurrency world.

I think an event like this is very good to do in the cryptocurrency world. The first thing I think is why this is a good thing because it can remind everyone in the cryptocurrency world that we must always have full control over the crypto assets that we own. This can remind us of the original purpose of making cryptocurrency by someone with the initials Satoshi Nakamoto which aims to remove third parties in terms of transactions and so that users have full access to the assets they have.

Then the next thing that can benefit from this event is that we can lure out rogue exchanges that actually don't have enough funds to back up all assets owned by their users if something happens. There have been many examples of exchanges that went bankrupt because they were hacked and they couldn't pay the stolen user money. There are even some exchanges that take away the assets of their users, causing huge losses to many people.

By making large withdrawals like this, we will be able to see which exchange really has the capital to back up all the money from its users. Then if there is an exchange that will do a "Bank Run" then this can be anticipated from the start by many people.

Precautions When Participating

If we are going to participate in the Proof of Kays Days event, then there are several things that we must pay attention to so as not to experience losses when participating, these include:

• Using a Secure Wallet
  The first thing we should pay attention to is to set up a wallet that is safe and trustworthy. We must ensure that the wallet that we will use to store the crypto assets that we send from CEX is a wallet that has been guaranteed security and has been trusted by many people. Or the best is to use a Cold Wallet such as Ledger, Trezor, etc. so that the security is guaranteed.

• Scalability Issues (Network Congestion)
  The next issue we should pay attention to is the scalability issue. When this event takes place, there will be many transactions that occur on the blockchain network so that it can cause the network to experience congestion because it has to serve large amounts of transactions at the same time. So we have to consider this because this bottleneck could cause the system to crash and the crypto assets that we send don't go into our wallets.

• Keeping Keys Offline
  Always pay attention to save the keys from our wallet offline. Never store keys online such as in email, google docs, etc. which can be easily hacked by irresponsible people.

• Calculating Transaction Fee
  When we make a transfer from CEX to our wallet, we are charged a transaction fee, and there are even several types of cryptocurrencies that have a transaction fee that is quite expensive for one delivery such as Bitcoin and Ethereum. We must first calculate the transaction fee whether we can accept it, or if in the end we will send it again to CEX then we should not need to participate in this event.

Question 3

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

I'll go straight to Decentralized Wallet to answer this question.

The reason is actually very simple, I don't like my assets being held and managed by other people without my knowledge. Because I think a person's assets must be held and controlled by the owner of the asset. The decentralized system created by Satoshi Nakamoto is a very advanced system and has completely changed the financial world at large, so it is fitting that we who are in the world of cryptocurrency really use and take advantage of the decentralized system that has been created by this person.

Source

In addition, I also explained earlier that there have been many cases where CEX has taken away the crypto assets of its users. The most recent example in 2021 is Thodex Exchange which is an exchange in Turkey that has taken away its users' crypto assets worth $2 billion. This is one proof that CEX still has access to its users' crypto assets and they can even take the crypto assets away whenever they want. This is very troubling and I am personally very uncomfortable with the possibility of cases like this.

In addition, now there are many decentralized wallets that can be directly connected to various DApps that can help their users in every way. And almost all decentralized wallets are already connected to decentralized exchanges that can also be used for cryptocurrency exchanges. There are even some exchanges that offer instant exchanges without taking a long time, for example such as Uniswap on the Ethereum Blockchain, JustSwap on the Tron Blockchain, and PancakeSwap on the Binace Smart Chain.

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

Now I will show you how to send Steem from Binance wallet to Steemit Wallet. Based on the command assignment given by the professor, the minimum amount of Steem that must be sent is 20 STEEM.

The first step is to select the Withdraw option in the wallet menu on our Binance account. After that, look for the Steem kin in the search menu and click on the Steem icon once it has been found.

Screenshots From Binance App

Enter the recipient's address with our username without using "@" in the address field. Then select Steem network and enter the amount we want to send, here I will send 20 STEEM with a transaction fee of 0.01 STEEM so that the amount of Steem that will enter my wallet is 19.99 STEEM.

After that we will be asked to confirm the transaction, to continue we select Confirm and finally there will be a page showing that my transaction is being processed.

Screenshots From Binance App

After the delivery process is successful, a notification will appear on Binanace showing the details of the transaction that we have done. Then I checked my steemit wallet and the Steem I sent from Binance has successfully entered my steemit wallet.

Screenshots From Binance App dan Steemit Wallet

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

For the next example I will send some Tron (TRX) coins from my Binance wallet to TronLink Wallet. The steps are almost similar to sending Steem coins that I explained earlier.

The first step is to select the withdraw option in the wallet menu and look for the TRX coin in the search field, after the coin appears then click on the TRX icon.

Screenshots From Binance App

Enter the wallet address in the address column at the top, then we will choose Tron network (TRC20) because TronLink Wallet only supports that network. After that, we enter the amount of TRX you want to send, here I will send 51 TRX because later the shipping fee will be deducted by 1 TRX so that the amount of TRX that will enter my Tron Wallet will fit 50 TRX.

After that, I will confirm the delivery of TRX by pressing the Confirm button and a notification will appear that our transaction is being processed.

Screenshots From Binance App

Then there will be 2 notifications from 2 different applications informing me that the TRX delivery process that I did was successful, we can see below I have received notifications from the Binance App and TronLink Pro App showing that the transaction I made was successful.

Screenshots From Binance and TronLink Pro Apps

For the final check, I double-checked the amount of TRX in my Tron Wallet through the TronLink Pro application. You can see that the number of TRX in my Tron Wallet has increased 50 TRX which was originally only 78.74 TRX to 128.74 TRX.

Screenshots From TronLink Pro App

Question 5

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

By doing the 2 transfers that I did in question number 4 before, I believe this is a first step from the actual application of the Decentralized System. We as people who are already aware of the importance of decentralization must be able to apply it to ourselves, and we must also always remind others not to trust too much "the bad CEX" that cannot be trusted to hold our crypto assets.

Conclusion

Proof of Keys Days is an event that is very unique and has just been applied to the cryptocurrency world. Events must always be preserved so that everyone understands the importance of where and privacy of cryptocurrency assets. Then with an event like this we can also fish on the evil Centralized Exchange (CEX) which actually does not own any assets and has the potential to deceive its users. We should not be too used to giving away our Public assets and Private keys to third parties, we must be independent and must be able to manage our own crypto assets.

I thank professor @awesononso who has given lessons on a very unique topic like this, I really get new knowledge from this given topic.