Crypto Academy Week 14 - Homework Post for @levycore …
I remember some years ago standing in the bank queue for more than 2hours, and funny enough, on getting to my turn, there was network issue and I wasn't even attended to that day, I can still remember the depth of pain I felt not until I got into the crypto world and I became digitalized, no more queue, no more waiting for hours, life became easy and by then you would discover that the world can be faster if we let it get fully digitalized.
1. What is the fundamental difference between Cryptocurrency and the conventional financial system?
The fundamental difference between Crypto Currencies and Conventional financial systems is the fact that the Crypto Currencies work with a decentralised kind of system while the Conventional Financial system works with a centralised type of system.
The government of a state which gives indirect backing to the conventional financial systems, issues legal tender for exchange, that is fiat currencies that are the other way round ,handled and controlled by a single body known as the Central Bank of the State where as Crypto Currencies are digital asset stocks which are government independent and can be used in transactions anytime ie the government has non-authority over them
There are many other differences between the Cryptocurrencies and the conventional financial system but I will be highlighting a few below
Some Highlighted differences between crypto currencies and conventional Financial systems
|CRITERIA||CRYPTO CURRENCIES||CONVENTIONAL FINANCIAL SYSTEM|
|LEGALITY||Not controlled by Government||Controlled by Government|
|STORAGE||Stored in digital wallets||Stored in banks and other platforms like paypal|
|EXCHANGE PATTERN||Purely digital||Digital and Physical|
The list goes on and on but I believe with the above differences, I must have been able to differentiate between the Crypto currency and Conventional Financial system
2. Why is a decentralized system needed?
There are many reasons why a decentralized system is needed in our world today.
Majorly , most crypto currencies operate with decentralised networks on their networks (blockchain). Therefore we have to understand and discuss ,the necessity for a decentralised system which includes;
The total access and exhuberance ,to your coins at anytime ; One of the advantage the Crypto world gives is the access to your coins at anytime unlike a Centralised system like the bank whose failure at anytime could give restraints on how coins are disembursed
It gives risk absorbance to users or the coins incase of other coins failure ;
Generally ,the crypto world consists of several coins which gives customers variety of choices to make which makes the consumers leave all their eggs in different baskets ie giving them risk reduction so that even if one coin fails others are still in the process
It gives way for general participation and development ; Also, the Crypto Currency decentralised system gives way for everyone to participate in buying and selling of it and even efficiency in that everyone who has capable ideas too can establish networks
This helps in users and owners of blockchain being effective so as to maintain their patronage and prestige
Dominance: It keeps you in full control without a third party or any organizing body which increases transparency and efficiency
3. What affects the value of cryptocurrencies?
In the market trend of Crypto Currencies, ie the bullish and bearish trends or the rise and fall trends of a crypto coin ,there are factors responsible for it's movements which are ;
The demand for the Crypto currency;
The market wanting for a Crypto currency gives it it's rise factor since when it's market cap increases price tends to increase
News factors ;
Another great factor affecting the trends of crypto coins are ,news factors which make traders or buyers want to buy based on it's prominence for example when Elon musk announced the ability of users to buy a Tesla with Bitcoin, this news caused a rapid increase in the Bitcoin price
One of the factors affecting the price of a crypto currency, is it's market cap that is the amount of the crypto in circulation which would indirectly affect the number of wanters for it and it's price relatively.
The efficiency of a crypto mostly is determined by it's fellow competing Cryptos , this would make them be effective and have bullish trends since they become stronger with the competition of others
Cost of Production: some coins are being mined with electricity being one of their most expenses added to the reward gifted to the miners for finding a new block. This also affects the value of cryptocurrency
FEAR: The fear of losing out of the trend or the fear of not belonging to the crypto trend causing the increase or decrease in price values as fear leads to either a panic buying or panic selling
4. Why can't everyone be a miner?
Crypto currency mining basically could be understood to be a process of performing computations for the bringing of new crypto Currencies into the market.
We understand that with the mining of a Crypto coin ,you do not have to pay digitally for the coin ,instead once your works or processing for it is complete ,you have the coin itself.
Therefore ,not everyone can mine a cryptocurrency since they do not have the ability to perform the complex computations involved in its mining and the sophisticated computers and systems too involved in it are not rampant and gotten anyhow.
Also, strong technology personnels are needed for the reward of tokens which makes it impossible for everyone
** 5. Why can cryptocurrency transactions be called more transparent?**
Crypto currencies could be termed more transparent for reasons based on it's decentralized features including ;
Public transactions All crypto currencies transactions are public and can been seen by anyone, an aspect of honesty the world is not used to
Permanently Stored All transactions done are permanently stored and cannot be erased for any reason Making it very transparent
Access to Crypto Currency at anytime ;
The Crypto currency is termed more transparent since users have access to their coins at anytime unlike other centralized systems that could have access issues based on temporary issues
6. Explain how the development of cryptocurrency in your country?
The development of crypto currencies in my country Nigeria ,could be seen as progressive. In Nigeria as there are many crypto currencies in circulation in the state including ,
Bitcoin, Ethereum , Litecoin , Binance coin , Ripple etc . Nevertheless the news of crypto currency volatility brings the understanding of just few coins to the Average traders for example Bitcoin and Ethereum .
A major issue of crypto currencies in Nigeria could be seen as the the central bank of Nigeria bans the use of naira in Crypto transaction ie that Crypto can't be bought or sold with naira hereby complicating the trade process since the Central Bank Governor of Nigeria at the moment, Mr. Godwin Emefiele stated that there is no central Bank for crypto currencies because he feels that the dominance of crypto currency in the country will lead to a fall in our naira currency, which leaves it with no definite backing and some risks
There are also , no product payments done in the country with any currency that is not the legal tender ie Naira .
But despite the fight from the government, my country topped the rank for Bitcoin users in 2020
Finally the the bullish trends of crypto currencies , had made the Nigerian citizens in want, to be buying crypto coins since everyone wants money that is just held and watched increasingly managed . Like we saw in the former lessons ,Bitcoin still has dominance in the market since the market cap still consists of More Bitcoin
Finally , we can derive from this work,the characteristics of the decentralized system of Crypto currencies , their importance and the validity of Crypto currencies even in my nation
Understandably , the decentralized system gives efficiency and transparency to traders which leaves the traders at comfort of trades since their accessibility is guaranteed
Crypto mining too is shown as the process is seen to be very rigorous and not for everyone to perform
My nation's standing of crypto currency too is shown as naira isn't used in the performing of crypto transactions and users too are awed by it's steady increase by the day
Having said all this, I appreciate every one for going through my post