Homework

1.) Explain private and public Keys in relation to custodial and non-custodial wallets.
2.) What do you think about the Proof of Keys Day? What precautions would you take when participating?
3.) Do you prefer Centralized exchanges or Decentralized wallets for storing your cryptocurrencies? Why?
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).
5.) In one statement, what is the major significance of the transfers in question 4.

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

In primary terms public key can be defined as an alphanumeric numeric key which is used for the encryption of plain messages and texts. The public key turns plain texts into cypher-text.
Private key can be defined as an alphanumeric key which is used for the decryption/ decoding of an already encrypted text or message. The private key enables the reciever to turn cypher texts into plain messages.

As their names implies the public key can be made public and anyone is allowed to use it in sending encrypted message to a reciever. The private key is a personal which is only held and used by one person to decrypt and read the messages received from the sending end.

In relation to to custodial and non custodial wallets;
Custodial wallets are those types of wallets where transactions of a user is completed by a third party while using their private keys, here no user has access to his private key because it is held by a third party personality which the user don't know. The third party is the one who uses the private keys to verify and complete every transaction of the user, in such wallets the user is dependent on the third party to manage his/her transactions. Transactions that are not allowed or completed by the third party will not be successful. However, should in any case a user wants to withraw all his funds and change wallets, the funds are given back to him/her. Examples of such wallets are Freewallets, Coinbase, etc.

A non-custodial wallets refers to wallets which every user is in charge of his/her private keys and performs all his transactions on his own using his private key. In a non-custodial wallet a user is not dependent on any third party to complete his transactions, he is in full control of his crypto assets and can use it as he likes. In such wallets any mistakes occured is at the users full expense. The security of a user depends on how best he/she is able to secure his/her private key. Examples are Nuri, Edge, Steem, etc.

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

The proof of keys day is an event which was originally created to celebrate the 10th anniversary of the bitcoin genesis block, it was first celebrated on the 3rd of January,2019. Aside the purpose of celebrating the bitcoin genesis block, it was also adopted by crpto investors and exchange users to celebrate the proof of keys day, a day which these users and investors simultaneously withraw all their crypto assetsfrom a centralized exchange to a trusted decentralized exchange

From my view, I think the proof of keys day is a day which investors and users users of centralized exchanges gain independence and have control over their private keys and transactions rather than depending on the centralised exchanges for their transactions and security. In addition, it also allows the users to find out exchanges who are not true to their nature, what I mean are those exchanges who do have as much coins and tokens as they claim they but are dependent and those deposited by their users.

What precautions would you take when participating?

• During the withraw and transfer of crypto assets ensure that the other wallets or exchanges they're being transferred to is a popular and trusted one in order to avoid using false exchanges that may rob you of your crpyto assets.
• Participants should make sure they do not store their private key online rather an external drive should be used or even securely writing it down this is because it can easily be possessed by hackers, a lot of hackers will be on the hunt to grab as much as they can.
• Should in any case there is a delay in transactions do not panic because there are lots of people also performing similar transactions and this can lead to a slow traffic in the network.
• It is adviced that participants try to maintain some secrecy in regards to mentioning his/her balances or mentioning sensitive information that can cause insecurities and lead to focused atteck from hackers.
• Do not make the mistake of assuming that some coins/tokens use the same receiving address in order to avoid permanent loss of ones crypto assets. Take your time and use only the addresses specified for each coin or token.

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

From honest views I would choose the decentralized wallets over the centralized wallets.

Below are my reasons;

• The high transaction fees; Certain fees are required to be paid while performing transactions in a centralized exchange and these fees are sometimes relatively high whereas in decentralized exchanges there are no transaction fees even though there are it is very low/minimal.

• My Security; It is not new to hear that decentralized exchanges have more secure systems than the centralized ones, therefore I wouldn't want to have a loss on my hands. Hackers can attack these third parties in centralised exchanges and gain possession of the private keys use it to access and move all the funds in the wallets and is not something I would like to experience.

• Regulations; Should in case the government decides to place a ban or regulation in crypto exchanges in my current location or society it will have no or little or effect on decentralized exchanges when compared to centralized exchanges.

• Independence; While using a DEX, I will not be dependent on any third party to verify and complete my transactions using my private keys, I have all the control on my wallet, assets and transactions.

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).

The exchange I used to answer the question and make my transfers is poloniex

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

Step 1: I opened the poloniex app and clicked on wallets.

Step 2: I then searched for steem by scrolling down and I clicked on it.

Step 3: I clicked on withdrawal. Some blank spaces were provided to fill in the transaction details, such as reciever's address, amount of steem, memo e.t.c. I clicked on continue after filling in the details.

Step 4: Another page came up and I also clicked continue, then a last confirmation page came up and I clicked on confirm & withraw

Step 5: After a few minutes I checked my activity history to confirm if the withdrawal have been completed.

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

Step 1: I visited the poloniex site once more. I clicked on wallets and searched for Tron.

Step 2: I clicked on withdrawal and filled in the required details such as the network, address, amount on the space provided and then clicked continue

Step 3: I clicked on "withdraw Trn" and a last confirmation page came up, I clicked on "yes send funds"

Step 4: After a few minutes I checked my activity history to check if the trx had been withdrawn successfully.

(All the unsourced Images are screenshots taken from poloniex and they were edited by me)

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

I think this transfer of funds is to show that I am the owner and controller of my crypto assets and can do what I like with them.

Conclusion

It is very important for evey crypto trader to effectively maintain his/her wallets and try as best as possible to avoid every sort of fraud or hack. It is also good for traders to participate in the proof of keys day and change their wallets/exchanges. I believe in this lecture I have fully answered all the questions.
Special regards to the professor for a nice lecture.