Crypto Academy Week 14 - Homework Post for Prof @levycore
Hello Everyone,
Am so happy to attend @levycore class again this week and the class for this week explained all about cryptocurrency. Here is my homework given to me by @levycore.
Before I start answering my homework question I would like to write briefly about cryptocurrency and conventional financial system which we can also call traditional financial system.
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Cryptocurrency can be define as a digital or virtual currency built on blockchain and secured by cryptography which makes it impossible for counterfeit transactions. Examples are; Bitcoin, Litecoin, Tron, Dodgecoin and others. It can be use for an exchange online for good and services and it can also be traded with. Cryptocurrency is a digital currency introduced as an alternative to traditional currency.
Cryptocurrency such as Bitcoin use a decentralized network which mean they are independent of government or banks, they lacks intermidiaries. It is used for virtual transaction because it is a digital currency. It's transaction is a peer to peer one where all members all equal. It's a currency that can only be recognized electronically.
While, Conventional financial system which we can refers to as bank system exples CBN i.e. Central Bank of Nigeria. They make use of Centralized system i.e. it rely on a central authority like government. Banks are the one in charge of traditional currency. Examples of traditional currency in the world are Dollar, Naira, Rupiah and others. It is the first currency before the existence of cryptocurrency. Traditional currency required third party to manage your account compared to cryptocurrency where your account is decentralized i.e. independent of any party.
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Traditional finance system is safe and also risky to keep money. They issue credit and debit which hackers can use to track your spending and activities and lead to identity theft when in the wrong hands.
However, bank charge high prices for transaction done and service rendered and sometimes take days to confirm transaction. Bank sometimes dicduct money without you knowing you, will just see that an amount of money as been removed from your account.
currently we have 180 currencies acrossed the world that is recognized by the United national while as listed on coin market cap we have 9,906 cryptocurrencies. So, there are many differences between cryptocurrency and conventional financial system.
Cryptocurrency can be use in many ways but digitally. It was analyzed in @levycore class. Example, mining of cryptocurrency, it is a way to add to your crypto. Here, miner's are requires to solve some complex mathematics in order to add to there blooks. But our traditional can be mined only if they converted to cryptocurrency because they are physical and also stable currency.
Another one like it is investing, cryptocurrency can be invested by buying some cryptocurrencies like Bitcoin, Ethereum and so on to keep. But if you keep our traditional currency it will just be there except you do some banks like investing into the bank but your money will be there for a particular period of time to increase or to get your interest before you can withdraw it because it is controlled by a certain authority.
Cryptocurrency is never like that if you invest your money, you can even withdraw it anytime you wish, because it's in your care.
What is the fundamental difference between cryptocurrency and conventional financial systems?
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Difference Between Cryptocurrency and Conventional financial system.
| Cryptocurrency | Conventional Financial system |
|---|---|
| It is recognized electronically. | The traditional currency in the financial system is reconignized physically. |
| They are built on blockchain and cryptocurrency are decentralized. Crypto like Bitcoin use a decentralized network. | It is centralized. I.e. it is controlled by a certain authority e.g Government. |
| They lack intermidiaries. | It is controlled by the intermidiaries. |
| The Examples of cryptocurrency are Bitcoin, Litecoin, Ripple, Dodgecoin, and so on. | Example of traditional currency are Naira, Dollar, Euro, Rupiah and others. |
| Crypto is easy to transfer but | Traditional take some stress and process before you can make transfer |
| Cryptocurrency is independent of the third party while | Traditional currency is dependent on the third party. |
Why is a decentralized system needed?
Decentralized system as it's sound means it's available for everyone. Decentralized system is very important in the whole word because it is known for being secure and providing a level of anonymity.
Also, cryptocurrency is needed because it is independable of any certain authority like government and that makes it secure and transparent also because decentralized system allow it user's to be independent.
Decentralized system allows it user's to do according to their will but in Centralized system there is rules and regulations user's must follow. Decentralized system lacks intermidiaries i.e there is no space for third party to interfere in the business of the user's.
What affects the value of cryptocurrencies?
If we should talk about the factors that affect cryptocurrency, factors that affect cryptocurrency are of different some which are listed below.
- If a particular asset is accepted by many:
As you can see in the above screenshot image, this is when a particular asset like Bitcoin and Ethereum is accepted by many, it will increase the holder and also increase its dominance in the cypto world.
- If a particular asset is being announced by a particular celebrity. For example Elon Musk, Elon mark is a cryptocurrency investor and also a celebrity who has over 53 million followers on Twitter.
In the screenshot above we can see a post of Elon Musk mentioning that Dodgecoin can be the future and with this post it helps in the increase of the Dodgecoin.
Another of his post on Twitter as you can see in the above screenshot. He asked is over 53million followers if Tesla should accept Dodgeoin and during this writing over 1 million followers bought Dodgecoin as it makes the up to shot up $0.46 to $0.54, before reducing back to around $0.50.
- Speculations:
As speculation can increase the price of an asset while it can also decrease the price of an asset. Especially, if it is being speculated by a celebrity that a price of a particular assets will decrease at a particular time it can make the assets to lose its value while it can also help in a positive way by saying it will increase.
For example Elon Musk, if a Elon musk speculate on a particular asset either it will either will shoot up or down because of is over 53 million followers.
- Supply and Demand:
Supply and demand is a very big factor that determine the price of cryptocurrency and anything that can be traded. For example, If more people are willing to buy asset, while others are willing to sell them, the price will shot up and down.
It is factor thst can affected by anything that can be traded. Supply and demand is a very big factor. It increase when there is alot of demand while it decrease when traders sell their assets.
Why can't everyone be a miner?
Mining in cryptocurrency is the process by which transaction is verified and added to blockchain public ledger. They can also be called node.
Cryptocurrency mining is truly not for everyone because is not a child's play. Mining equipment and power are very expensive. It require equipment like a separate mining computer for the miner. If you want to be a miner, you must be ready for it because it is not something you can wake up and decide you want to do.
To be a miner is very expensive and it requires a lot. Miner's will need to have mining software in order to try cryptocurrency mining. It will be the software platfrom where mining will be carried out. There is too much of risk in cryptocurrency mining because you could invest your time and money into mining and still end up with nothing. There must be no failure of electricity during mining.
Why can Cryptocurrency transactions be called more transparent?
Cryptocurrency is a digital or virtual currency that can be Exchange for good and services and can also be traded. Crypto is a currency that is built on blockchain.
What do you understand by a blockchain? Blockchain is said to be private, transparent and secure at all time. It is a public record of cryptocurrencies which is refers to as digital transactions on a public ledgers.
Cryptocurrency like Bitcoin, Ethereum and others are builded on it in order to be private and transparent with standard security. Blockchain is a future technology.
Some people see blockchain as a public ledger that makes transaction more transparent while some think it is the best way to display and for everyone who hold businesses accountable for their actions.
Blockchain services in cryptocurrency render security to your identity by covering it up with strong and uncrackable cryptography and also makes everyone to be equal. It doesn't give space for counterfeit transactions.
In conclusion, Blockchain is called more transparent because it was builded on Blockchain. Blockchain gives a very strong protection on cryptocurrency and display it transaction on a public ledger for each and everyone to be responsible for their actions.
Explain how the development of cryptocurrency in your country?
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Cryptocurrency in Nigeria
Cryptocurrency in Nigeria as been a good one. Especially, it really help youth in doing something to create wealth for themselves because of the lack of Job employment in the country but CBN i.e. Central Bank of Nigeria was Against it.
Cryptocurrency can be traded in Nigeria. But it get to us that Central Bank of Nigeria (CBN) issued a circular asking banks (commercial) and other financial institutions to close accounts transacting in, or operating on, cryptocurrency exchanges and also asked banks to identify “persons and or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.”
But after sometimes they denied and said they never go against cryptocurrency that the information is not from CBN. So people are now independent to trade, invest and can also send converted money in naira to your bank account.
In the last 5years Nigerian's have traded over $500 million in Bitcoin,making it the second largest Bitcoin market after United States of America. Cryptocurrency as being a helpful hand to Nigerian youth.
In conclusion, thanks to Prof. @levycore for this wonderful topic and am so happy to be one of the participant. Also, thanks to all that will be viewing my post.
Hi @anyagladys , Thanks for submitting your homework
Feedback: You have completed every point and you have understood the basics of cryptocurrency
Rating:7
Thank you Professor @levycore.