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Hello to my submission on Learn About Cryptocurrency.

Introduction.

It is a great pleasure to be a part of this class as I continuously learn about new things. We were lectured on buying and selling of NFTs last week which was a great experience as I got the opportunity to create my own NFT.

This week we have been lectured on Cryptocurrencies which is generally what cryptocurrencies are. I would now try my best to answer the questions asked.

What is the basic difference between cryptocurrency and conventional financial systems?

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Cryptocurrencies are digital assets created and managed to be used for virtual transactions without the involvement of central authorities or third parties otherwise known as intermediaries.

Cryptocurrencies are volatile assets with no stable price. Examples of such digital assets or currencies are bitcoin, ethereum, tether, steem, ripple, litecoin, among others. Cryptocurrencies run on blockchain systems and are open source.

Conventional financial systems are centralized systems that involve central authorities like banks and use physical money. The banks are third parties or intermediaries.

Conventional financial systems are not open source and volatile. They have stable prices and have financial authorities that look into theft and missing monies.
There are different currencies conventional financial assets which include; rupies, cedis, naira, dollars, pounds, among others.

Basic difference between cryptocurrency and conventional financial systems

Cryptocurrencies were introduced to address the challenges of the conventional financial systems and for people to have 100% control over their money. It hasn't achieved that yet as the conventional or traditional system is still very much in place.

However, there are a lot of differences between the two and I would like to talk about the basic ones.

First of all, cryptocurrencies are decentralized where as Conventional financial systems are centralized.

Cryptocurrencies allow their users 100% freedom to handle their monies and take decisions they deem best for them.
They run on blockchain systems and have a peer-peer transaction system (P2P). Users are not at risk of having their accounts blocked or deleted.

Conventional financial systems are centralized in the sense that, users doesn't have 100% control over their money. Users are subjected to go through intermediaries in this kind of system.

However, the plus side is that they have financial authorities that can replace their money should it get stolen when the user is not at fault.

Users can have their accounts blocked when they are suspected of malicious activities which is not something people like.

Secondly, Cryptocurrencies are safer and more reliable than Conventional financial systems.

Security is very important and is the number one factor we all consider before venturing into a opportunity.
Cryptocurrencies run on blockchain networks and as such are very safe and almost unhackable.

They are also very reliable as a user can perform a transaction anytime and anywhere.

Keys or passwords of a user are kept and known only by him and a compromise is sometimes from the carelessness of the user. A user's identity cannot be stolen.

Conventional financial systems are less safer and less reliable than cryptocurrencies. These centralized systems like the bank can be compromised making it prone to hacks. This has already happened before as banks have had their systems hack and monies stolen. Even bank workers can do the stealing.

To make a transaction, one needs to do it within the working days of the bank. This means when a user needs money urgently and it is not during the bank's working hours, he can't make a transaction. A user's identity can also be stolen when using this kind of system.

In addition , another major difference between cryptocurrencies and Conventional financial systems is the speed involved in making transactions.

Cryptocurrencies are relatively very fast in performing transactions where as the traditional system of banks are slow. A cryptocurrency user can take as low as 2 minutes to make a transaction but can spend hours just to make a trade in a bank.

Autonomy is a difference between cryptocurrencies and Conventional financial systems.

Autonomy is the ability to keep your identity hidden. Not everyone wants their identity revealed or known on every platform they are on. Some people like making donations in secret and cryptocurrencies helps in that.
In using cryptocurrencies, a user can decide to use a nickname if he or she doesn't want his identity revealed but same cannot be said for conventional systems.

You need to have all your data verified before you can even have an account on a conventional financial system and as such you cannot keep yourself autonomous.

Finally, in terms of risk, it s riskier to invest in cryptocurrencies than in Conventional financial systems.

Because of the price volatility in cryptocurrencies, you can never tell if you'll make a loss or a profit. Cryptocurrency prices can be high for a while but can quickly fall in value as well. It is therefore very risky if you have invested money you can't afford to lose.

On the other hand, the value of currencies in the bank are stable and so you know the profit you make for the period your money is in the bank. This makes investing in conventional financial systems less riskier than cryptocurrencies.

The differences have been put in the table below;

Cryptocurrencies	Conventional financial systems
Decentralized system	Centralized system
Open source	Users don't have their 100% freedom
No intermediaries involved for transactions	Involves intermediaries for transactions
Safe and reliable	System can be compromised and likely be hacked
Transactions are fast	Takes longer time to make transactions
No fees charged	Fees are charged for transactions
Identity can be autonomous	No autonymity
Transactions can be done any day	Transactions depend on bank working days
Price volatility	Stable vale in currency

Why is a decentralized system needed?

A decentralized system is an open source system that gives its users their freedom and has no central authority. It was released or developed to battle the centralized system where users lack freedom and uses a central authority.

Since its first release with bitcoins, people traders and investors have gotten to feel what decentralized systems are and appreciate it a lot. The following are the reasons a decentralized system is needed.

The first reason I would start with is security. In as much as it comes with a lot of advantages, I feel security is one thing we all look out for before entering into anything. centralized systems have proven to have comprises as they have been hacked and had the data of its users compromised.

The decentralized system runs on blockchain networks which have store data on several servers and as such are not at a risk of data loss.

Another reason I would talk about is the open source system. The open source system is allowing users to have control over their decisions. A decentralized system like steemit gives its users the 100% control of their account and whatever decision they want to take on the platform.

I think everyone wants to have the freedom to decide what steps they need to take and not follow a "manager's" plan.

A centralized system doesn't give the room for you to follow your own plan but you need to follow the plan of the recognized leader.

Trustless environment is another reason for decentralized systems. Making transactions that require middle men has always been a menace so to be able without going through a middle man is a big advantage. A user doesn't need a third party or even worry about going to the bank when he can sit in the comfort of his home with a good network and perform a transaction whenever he wants. You don't need to pay transaction fees which cuts down cost massively.

Transaction speed and convenience is also a reason why decentralized system is needed. We all hate the fact that we need to go to banks before we can make transactions. We also do not like the fact that banking processes are slow and we spend hours and hours before completing our transactions.

So to make transactions faster and more convenient, we have the decentralized platforms where transactions can be made by anyone, at anytime and they are fast. There is no need to wait in long queues and fill out forms before you make a transaction in the decentralized system like Steemit.

What affects the value of cryptocurrencies?

Several factors have the ability to make the value of cryptocurrencies go high or low. Investors of cryptocurrencies buy and sell their their assets based on these factors.

The very first and most important factor is the demand and supply. The primary factor in any economic environment is supply and demand. The more there is demand in cryptocurrencies from investors, the value increases but a decrease in demand sees a decline in its value.

Another important factor is news or comments from prominent people. An example of this is when Donald Trump publicly tweeted saying he didn't like BTC and any other cryptocurrency. This saw a significant dip in the value of bitcoin and other cryptocurrencies.

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This statement from Trump saw BTC value drop to about 10%

Another example is when Elon Musk tweeted "Tesla will now accept BTC for purchasing their vehicles". This saw a significant rise in btc and other crypto value. When he again tweeted that Tesla will no longer be accepting BTC as a medium of payment, the price in BTC has dropped since.

Policies put in place by government to reduce the use of crypto. It is no secret that most governments do not like the idea of cryptocurrencies. They try to reduce its value by putting measures in place to reduce its rate of use in their countries.

Coin burn is also a factor of cryptocurrency value. Coin burn reduces its quantity or total amount and as such increases its value. On the other hand, coin inflation reduces the value of cryptocurrencies.

Why can't everyone be a miner?

Although everyone can take part in mining of cryptocurrencies, its not advisable that everyone mine's. The reasons below are why not everyone can mine.

Mining cryptocurrencies like bitcoin is the process of verifying cryptocurrency transactions.

Mining cryptocurrencies involves the use of special computational and mathematical skills. It also consumes a lot of electricity. Also, the cost of a dedicated mining computer is very high.

Mining cryptocurrencies involves the solving of difficult or complicated mathematical challenges like puzzles and requires special skills. Special mathematical skills are not enough as you will need a special dedicated mining hardware computer or computers.

A hardware computer can cost about $2500 to $3500. Having just one of such a hardware computer would not be enough to mine block.

Mining cryptocurrencies consumes a lot of electricity. At the current cost of electricity, a user cannot afford to add the cost of mining to their budget.

According to https://due.com/blog/4-reasons-you-shouldnt-try-cryptocurrency-mining/ ,mining a single bitcoin runs from $3000 to over $9000 in energy costs. This same high cost in energy results in burning of fossil fuel for energy.

Why can cryptocurrency transactions be called more transparent?

Cryptocurrencies run on blockchains which consist of ledgers that record or store transactions across the computers or accounts of all the users. This digital ledger cannot be edited without making changes in all other blocks of users and as such prevents theft. This makes transactions in cryptocurrencies very transparent.

Transaction history of every user on this decentralized blockchain system is always available. Transactions are therefore transparent because every transaction is open for public knowledge.

For example, if I decide to decide to send 5 steem or SBD to another user here on steem or make a power up, a power down or steem delegation, all users can see it because it is stored on the digital ledger.

Development of Cryptocurrency in my country Ghana.

Cryptocurrencies are poorly developed in my country Ghana. Some Ghanaian people trade in cryptocurrencies like bitcoin although it has not been fully accepted in the country.

According to the bank of Ghana, " those that trade in cryptocurrencies are to be aware that it is not fully licensed under the Payments System Act 2003 ( Act 662 ).

They also acknowledge that cryptocurrencies can transform the economy and are currently making plans on how to integrate these currencies to make them fit into the global financial and payments architecture.

So although my country hasn't fully accepted cryptocurrencies yet, there certainly are plans to accept them in the near future.

Reference : ( https://www.bog.gov.gh/notice/digital-and-virtual-currencies-operations-in-ghana/ )

Conclusion.

I have learnt from this informative lecture presented by prof @levycore that cryptocurrencies are virtual currencies, decentralized, transparent and is a very good but risky market to invest in. Also, from my research I have realized t would be difficult for countries to accept the use of cryptos soon as some past governments have publicly condemned them.

Thank you.