STEEMIT CRYPTO ACADEMY WEEK 14: HOMEWORK POST FOR PROFESSOR @levycore.

INTRODUCTION

Hello great steemit crypto academians, special thanks to profesor @levycore for his week6 lectures, here is my homework post on cryptocurrencies.

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THE FUNDAMENTAL DIFFERENCE BETWEEN CRYPTOCURRENCY AND THE CONVENTIONAL FINANCE SYSTEM

The major difference or fundamental Difference between cryptocurrency and the long existing Financial system is the Decentralization of the cryptocurrency.
While the conventional Financial system is always involving a third-party or intermediary, the cryptocurrency financial system operates on a peer-to-peer nature. This peer-to-peer manner means that the transaction done with this cryptocurrencies only involve two parties, usually the sender (seller) and receiver (buyer) only.
The third-party that is always involved in the conventional Financial system could be the bank itself or the government. These bodies are always making decisions about the fiat currencies that is being used in the system without the users contributing anything in such decision making. The elimination of this third-party involvement by the introduction of Decentralized Finance (DeFi) which was brought about by cryptocurrency have been a massive development in finance.

WHY IS A DECENTRALIZED SYSTEM NEEDED?

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The Decentralized system is simply known as Decentralized Finance (DeFi), there are so many factors that makes this financial system to be very important and we need the Decentralized Finance system because of these reasons like the operation time, charges and convenience.
• Operation time: When you use the Decentralized Finance system, you can carry out your Transactions anytime, anywhere and any day, this is a great advantage over the Centralized system where their services might not be available during the weekends and during night time.
• Charges: The Decentralized system is really needed in order to eliminate some unnecessary charges usually imposed by the banks or even the government on users in the Centralized system. The Decentralized system allows for peer-to-peer Transactions which means that it is only the two parties involved that knows about it, the government does not even have an idea about it talk less of charging them.
• Convenience: Have you ever imagined seeing the end to the recurring long queue in banks, or having to go through some stressful process to correct a little mistake done by the bankers in your details? This are the reasons we need the Financial system to eventually become Decentralized, because Decentralization will eventually eliminate these issues.

WHAT AFFECTS THE VALUE OF CRYPTOCURRENCIES?

There are many factors that influence or affect the value or price of cryptocurrencies in the coin market, some of these factors are very different from those factors that affect the values of our fiat currencies while some are somehow similar. Here are the leading factors.
• Demand and Supply: It is quite notable that the developers of most of these cryptocurrencies always slow down the rate at which new coins are created when miners process blocks of transactions and even in scenarios where these cryptocurrencies are on high demands, they still maintain this low rate at which new coins are introduced, leading to a hike in the price or value of such cryptocurrency.
• Competition: There are a lot of cryptocurrencies around, and when a particular cryptocurrency is not competing well in the market (That is, it is not attracting more users or low demand), it's value will drop. But when it is competing well in the market (That is, having a better demand), it's value will rise.
• Number of users: I have decided to add this particular factor as one of the leading factors because I have found out that you will not see a very popular cryptocurrency like Ethereum having a very low value. This is because the more users a particular cryptocurrency has, the more it will be demanded, therefore leading to an increase in its value.

WHY CAN'T EVERYBODY BE A MINER?

It is true that everyone cannot be a miner due to some problems that the person might encounter and some other things.
• Expenses: One of the reasons why one might not be able to mine cryptocurrency is the expenses involved, for instance, the price of the dedicated computer that will be used for this mining, if the person does not have the money to acquire this computer or maintain it, he/she will not be able to mine cryptocurrency.
Acquiring the software used in cryptocurrency mining ( Cloud mining) is also costly and it can prevent one from taking part in the activity.
Electricity: There is little or no chance for someone staying in an area without power supply to mine cryptocurrency. The machine used for mining cryptocurrency is always consuming a lot of power and it needs adequate power supply.
Volatility of cryptocurrency values: Even a person who can afford the Expenses earlier highlighted will still have to consider the fact that the price of these cryptocurrencies are always very volatile like the recent crash in the price of Bitcoin. This can discourage some people from mining.

WHY CAN CRYPTOCURRENCY TRANSACTIONS BE CALLED MORE TRANSPARENT?

The reason I would say that cryptocurrency transactions are more transparent is that every cryptocurrency is built on a blockchain or with a blockchain technology, and every Transaction done with this cryptocurrency is being recorded on that blockchain system and that system allows these transactions to be transparent because it can be monitored.
Unlike the conventional Financial system where you put your money into the bank and you do not know what they are doing with it, when you hold your money in your digital wallet, you know everything going on with it and it is the same thing even when you use it to invest.

THE DEVELOPMENT OF CRYPTOCURRENCY IN NIGERIA

Local exchanges are not licenced Financial operators in Nigeria despite the continuous dominance of cryptocurrencies in other part of the world. With that, the local exchanges had to liaise with the commercial banks so that they can accept deposits and also facilitate withdrawals. But about three months ago, the Central Bank Of Nigeria prohibited it's Financial institutions from liaising with these local exchanges and they also asked all the accounts that had something to do with cryptocurrencies to be shot down.
Most of the exchanges have now introduced the peer-to-peer transaction system in order to enable Nigerians use their platforms.

CONCLUSION

Cryptocurrency might involve some risk and other disadvantages, but it remains a very commendable development especially with the Decentralized Finance system that comes with it. The advantages of cryptocurrencies are far more than the disadvantages so if you are interested in cryptocurrency, then you will eventually adopt methods that will minimize cryptocurrency problems.
Thanks for taking your time to go through this homework post, thanks.