Steemit Crypto Academy Contest / S2W1 - How Cryptocurrency has Shaped the Financial Realm. What is Its Future? by @cutlass

[EDITED-ON-CANVA]

Hello everyone my name is Oshoke and in this post, I will be taking you through an overview of what cryptocurrency is and how it has impacted our financial world

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OVERVIEW OF CRYPTOCURRENCY

Before going further into the course I would like to start by explaining what cryptocurrency, Cryptocurrency can be defined in a layman’s language as a decentralized digital or virtual currency which was designed as an alternative to the normal currency (e.g cash)we have in the current system, cryptocurrency are secured by hash and cryptography and are built solely on blockchain technologies with designs to alternate cash as a medium for exchange of goods and services. Cryptocurrency is decentralized which means that there is no central authority in charge of making more of it, no authority or team particularly in charge of controlling who can or can’t have it hence it is maintained by decentralized ledger and nodes
The cryptocurrency was brought to the attention of the world in 2008 by Satoshi Nakamoto the creator of Bitcoin in his white paper titled Peer to Peer Electronic cash system, which then lead to the creation of the first cryptocurrency ever called the Bitcoin which till date still remains the top tier cryptocurrency
Cryptocurrencies were wildly adopted a few years after they the emancipation of Bitcoin because it had no central authority and can be used to transact between users anywhere in the world with very negligible transaction fees . Cryptocurrencies are bought and sold between users or third-party platform like the Centralized/Decentralized exchanges for either Fiat or in exchange for another cryptocurrency.
A list of some popular cryptocurrencies

BITCOIN
ETHERUEM
USDT
LITECOIN
DOGECOIN e.t.c

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PERKS OF CRYPTOCURRENCY

NO GOVERNING BODY

Unlike our traditional currency the asset in your possession are 100% yours no one with exception of you can approve a transaction or restrict/freeze your asset.

LOW TRANSACTION FEE

When a user especially one’s on different ends of the world want to send funds to each other it is usually expensive and stressful cause of paper works and etc but with cryptocurrencies all one needs is just wallet address and no matter how far away the transaction will be executed

PRIVACY

With cryptocurrency no hassle for personal informations like DOB or name one can easily get started with our having to give off private information

DISADVANTAGES OF CRYPTOCURRENCY

FLUCTUATIONS/VOLATILITY
The price of cryptocurrencies is often very unstable as its price depends on how people buy and sell, if the sell rate is higher than the buy rate a decline in the price will be observed and vice versa, it is easy to loose money in conditions like this

FRAUD

Since no personal information is needed this is perfect for those who are into fraudulent activities or money laundering

DRAW A COMPARISON BETWEEN CRYPTOCURRENCIES AND CONVENTIONAL CURRENCIES

• EXCHANGE

Both cryptocurrency and conventional currency are quite similar in such a sense that they can both be exchanged for goods or services, many merchants are accepting cryptocurrency as much as they accept the conventional currency. In this case, I believe they are both similar

• UNIQUENESS

Just like the cryptocurrencies each conventional currency is unique and can not be replicated, cryptocurrencies are each assigned a unique hash that is collision-resistant i.e there can not be two of the same kind so does the regulating authorities in conventional currency assign a unique serial number to each fiat created which implies each is uniquely registered

• BOTH CAN BE DIGITAL

As we know cryptocurrencies are only digital currencies, well so can our conventional currency, individuals can now hold digital conventional currency in their bank account and can be sent from one end to another without having to touch a physical not just like cryptocurrency

• VALUE

Cryptocurrency is known for a good amount of volatility which is determined by how users buy or sell the asset which is quite similar to conventional currency if individuals increase the price of their goods(inflation) or bad economy the value of the conventional currency reduces

EXPLAIN THE DISTINCTIVE INNOVATIONS OF CRYPTOCURRENCY AND ITS DOWNSIDES

Innovations of cryptocurrency are simply new terms or methods introduced with the coming of the cryptocurrency, the most distinct innovation was the DECENTRALISED ENVIRONMENT it introduced which came with a lot of advantages and disadvantages.
Cryptocurrency does not need a central authority to run or operate smoothly the community partaking of nodes are responsible for governing the direction of the crypto, these nodes consist of every device that is connected to the blockchain from all edges of the world, with no limitations on who can participate and who can't, anyone with a device can simply connect to the blockchain and participate in governing decisions
Another incentive introduced by the coming of crypto is the high volatility we can see in the value of an asset this minute you can have a thousand dollars worth the next it's up to a million dollars and vice versa and lastly scalability

DOWNSIDES

• Although the decentralized incentive made the cryptocurrency a lot more self-governing and self-sufficient, the downside of this perk has is that there is no particular body in charge of anything, no one can be held accountable for any misconduct in the community, and every user is equal in the blockchain and since there is no central authority there is no one to report to in cases of misconduct, hence fraudsters take advantage of this decentralized community for activities like laundering etcetera

• As promising as cryptocurrency is a big NO it has is that it can make a millionaire poor overnight, most cryptocurrencies are known for there high volatility

• While the conventional currency surfs at very high transactions per second (up to thousands)the cryptocurrency leading coin is very noticeably slow ( tens), when one wants to perform a transaction instantly he will sometimes wait for minutes before the transaction will be processed.

HOW DO YOU THINK MAJOR PROBLEMS WITH CRYTPO CAN BE HANDLED? Let this be a response to the downsides highlighted earlier.

• DECENTRALIZATION

With the decentralization comes anonymity but with decentralization also comes a well organized self governing community, I believe in cases of users who want to hold a high amount of cryptocurrency a certain level of KYC should be introduced in an attempt to tackle fraudsters and implement some Anti-Money laundering policy to guide how much crypto can pass through an account

• VOLATILITY

The only way to deal with volatility is to bring about a steady amount of buy and sell of a cryptocurrency, one way to achieve this would be to bring in creative incentives that will encourage people to purchase or HODL your asset more. Some of this incentives can include

STAKING
REWARD HODL
REWARD POOL FOR ASSET OWNERS etc

Incentives like this if implemented well will encourage a lot of users to hold or stake an asset and if a high number of an assets is held stably in the blockchain Volatility will be kept in check

• SCALABILITY

Scalability is a big pillar in the crypto world, most users like instant transaction and this goes also for crypto currency. A way to implement or improve scalability can be done in a number of ways

Introduce off chain transactions (e.g lightning network)
Implement new consensus mechanisms
These are a few ways with which cryptocurrency can tackle the slow scalability faced by some of the most prominent blockchains

DO YOU BELIEVE IN THE FUTURE OF CRYPTOCURRENCY? STATE YOUR REASONS. Any Recommendations?

Here are a few reasons why I believe in cryptocurrency in the future

DIGITAL

The world as we know it is evolving fast and everyone is moving toward the digital era, most people like me believe in the cashless policy and don’t believe in carrying cash around, times will come where banks restrictions will overwhelm a lot of business or organizations into selecting crypto currency as there only way of payment as we know bitcoin and other forms of cryptocurrency are rapidly being adopted as a form of payment all around the world

CONTROL FREE
In the near future every one would prefer a currency that is not being influenced by our local economy or can be restricted by any local authority, the government have no control over cryptocurrency so no matter how inflated our conventional currency value is our Fiat pegged cryptocurrency like the USDT will be stable and a good alternative to local currency which depreciates as our local economy falls

SECURITY

When ever it comes to financial aspect individuals are always concerned of there finances security, in the near future as more eyes are being opened to how blockchains and cryptography work, more individuals will adapt cryptocurrency knowing how safe it is

CONCLUSION

Cryptocurrency being decentralized and digital blockchain backed medium of exchange has endless potentials, the potential applications are being discovered on a daily basis even in health sectors. In the near future many will see conventional currency as a thing of the past and only use it when necessary