Bitcoin, Cryptocurrencies, Public chains - Steemit Crypto Academy Season 5 - Homework Post for Task 5.

asibi (58)in SteemitCryptoAcademy • 3 years ago

Hello guys,

Tasks 5 of the fixed introductory courses opens us up to the knowledge of cryptocurrencies and public chains, it focused on how cryptocurrencies operates when it comes to their transactions and safety. Bitcoin is the first cryptocurrency to become a reality. Public chains are just like blockchains in its operationalization, it is open to the public to express their views and also make decisions on how to govern the platform.

After reading through the article presented, I want to summit my assignment base on my understanding on the topic.

Question 1

What Is Cryptocurrency and How You Would Like To See Cryptocurrency In The Future?

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Solutions

a) What Is Cryptocurrency?

Cryptocurrency in simple terms means virtual or digital money, it is not physically accessible but it is stored as figures on the internet or on our computers, yet it is very valuable and can be used as a medium of exchange.

Brief history of cryptocurrency

Though the idea of vitual money existed for some time until it came to a reality in 2008 after Satoshi Nakamoto stated the idea in an article during the global economy crisis that affected most payment systems and making money to loose it value very fast, so in 2009, the first cryptocurrency, called Bitcoin was created by Satoshi Nakamoto in an attempt to address this crisis. Satoshi Nakamoto want to solve the crisis by creating a payment system which do not use any financial institutions and can be used internationally in a decentralized manner. Hence he created the first block of Bitcoin known as the genesis block which formed the foundation for the Bitcoin blockchain. Since then, a lot of cryptocurrencies have sprouted up and now we have thousands of cryptocurrencies traded across the various cryptocurrency exchanges.

How cryptocurrency works

The word cryptocurrency is a compound word that is made up of cryptography and currency, Cryptography is a system of hiding information using computer codes and can only be accessible using keys. They are different types of Cryptography but the type used in cryptocurrency is the asymmetric encryption which use two keys, one for encryption and another key for decryption. A public key is used as the address of a wallet for decrypting any transaction or transfer and a private key is used for transactions and accessing transfers. Cryptocurrencies runs on a decentralized blockchain, this means that, it uses peer to peer network, there is no middle institution unlike the traditional banking system. Cryptocurrency gives users full control of their money and users controls 100% of their money, this makes it some times very risky when it comes to trading cryptocurrency since it is only regulated by users.

Types of Cryptocurrencies

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Cryptocurrencies can be classified broadly in to coins and tokens.

Coins: I will say that , digital coins are build on a blockchain and function the same way as fiat, that is, it can be used to store value or as a means of exchange between two people or organizations. Example include bitcoin and the altcoins which include ethereum, litecoin etc. Coins can further be broken down into stable coins and privacy coins.

Tokens: Tokens go beyond just limiting it used to just digital money, with tokens, there are created on top of an already existing blockchain and they can function as part of a software application to verify Identity. They can also represent virtual art like non fungible tokens that identify something as unique, example of a token is Ether used to perform transactions on the ethereum blockchain.

Some major cryptocurrency exchanges include; binance, coinbase, kucoin, poloniex etc.

b) How You Would Like To See Cryptocurrency In The Future?

Cryptocurrency is revolutionising the world financial and payment system, Satoshi Nakamoto had one thing in mind, and that is to solve the problem of the global economy crisis and make payments more decentralized. Personally, I strongly agree with him in all aspects, currently in my country, the government has increased taxes on mobile money transactions, meaning that, government will take shunk of my hard earn money which is kind of frustration. Because of this, in future I would want cryptocurrency to only be the mode of payment since it charges lesser fee compare to the traditional banking system, in that way, there will be mass adaption and the price of cryptocurrencies will rise.

Conclusion

I like to study and understand more about the cryptocurrency world, because not only can it make me rich, but the of finance system is changing towards decentralization and I don't want to be oblivion of how the world is going. Cryptocurrencies is the new dawn so let's embrace it and know more about it. Thank you professor @stream4u for this wonderful class, I have really learnt a lot and can't wait for your next class.