Private and public Keys in relation to custodial and non-custodial wallets
To better explain these keys, let's look at a very important concept we just can't overlook.
Cryptocurrency is derived or obtained from an encryption technique based to secure the network known as Cryptography.Cryptography prevents sensitive data from been compromised and falling into the wrong hands. Making it possible for Information to only be received by the designated recipient.
In cryptocurrency, this cryptography is given in form of keys, the Private keys and Public keys. These keys work simutaenously together.
The PUBLIC KEY is the wallet address. To make a transaction, a coin is transferred to the wallet address which is given to the sender which is encrypted on the publicly key. To receive or access the coin sent to your wallet or vice versa you will need to decrypt and sign off each transaction. This is made possible by the PRIVATE KEY. The Private keys are to be kept and stored privately. It is very important and the way to ones wallet, anyone who has access to your private keys has access to your funds.
With Custodial wallets, the private keys are not only known by you but also by a third party. This simply means that your funds are accessible to a third party. We can relate this to a centralized system that's run and controlled by a third party. You are not solely inclined for your asset decisions. This can be very conflicting as there can be misappropriation of user funds. It's more like having money but it's not really yours.
However, with the non-custodial wallets your private keys are solely yours to keep and control. We can relate this to a decentralized system where there is absence of a third party. No one controls your wallet but you.
What do you think about the Proof of Keys Day? What precautions would you take when participating?
I think the proof of keys day is based on the sole aim of transparency. A day to remind investors who really own their private keys. I also see it as the "movement day". In other to obtain transparency as I mentioned, it would need to promote decentralization. Assets are moved from centralized exchanges where third parties hold the cards to a decentralized exchange where "what is yours,is yours". In other to confirm just how much you own on centralized platforms users participate in this event.
Precautions to take to have a better
experience out of the event ;
Protection of my private keys, consider the use of temporary addresses.
As much as it is an eventful day it is a good day for hackers. Make sure my private keys are properly stored and uncompromised.
Double check the blockchain address, make sure it is absolutely correct before authorizing any transaction.
Also bear in mind that, due to large movement on that day it would be wise to consider the low scalability of Blockchain wish most likely will cause network glitch.
Most importantly,"do not move what I cannot afford to loose"
Do you prefer Centralized exchanges or Decentralized wallets for storing your cryptocurrencies? Why?
Preferably, I prefer to store my Cryptocurrencies on centralized exchange specifically on Binance.
There is no ambiguous reason just simply that its fast and rarely lags.
Let us assume it is Proof of Keys Day:
a.)Transfer at least 20 Steem from your Binance wallet to your Steemit wallet.
- To transfer Steem from Binance, I go to my Steem wallet under Spot and Click Withdraw
- Then I fill in the address, memo and amount and click Withdraw.
- I confirm and Verify
- It is received on my steem wallet.
b.) Transfer at least 50 TRX from your Binance wallet to your TronLink wallet
- To transfer TRX from Binance, I go to my TRX wallet under Spot and Click on Withdraw
- Fill in the address, the amount and click on withdrawal
- Confirm and verify
- Go to my Tronlink wallet and it is received.
In one statement, what is the major significance of the transfers in question 4.
It proofed that I own the wallet and also gave me full control over my coins and established the very importance of a Private key.
Conclusion
The importance of Private keys can not be overemphasized. The very essence of Proof of Key day I believe helps to create a balance and initiate that trust regardless of the exchange or wallet you're comfortable with. We should also not forget the necessary precautions to take should we want to participate in this event.
Thank you at Prof @awesononso for this lecture, I am once again enlightened.