Steemit Crypto Academy – Season 2 - Week 6 - Post for @levycore

Cryptocurrency and blockchain technology has grown a lot over the years and has been growing steadily ever since it was created just a few years ago… Blockchain has grown so popular and advanced that it gradually gaining adoption as many industries, institutions, sectors, and reputable individuals adopting blockchain and cryptocurrency technology. When it comes to cryptocurrency and its benefits, blockchain is an integral factor because there will be no cryptocurrency without blockchain technology.

What is the fundamental difference between Cryptocurrency and the conventional financial system?

One of the main reasons why cryptocurrency was created is to combat the current financial system which has proven to have a lot of flaws and disadvantages. That is not to say that cryptocurrency is perfect and doesn’t have any flaws at the moment, however, cryptocurrency is solving some of the flaws of the conventional financial system and trying to improve on it and make it better for the users.

Transparency

This is one of the main characteristics and benefits of cryptocurrency is transparency. The conventional financial system is mainly dominated by centralized institutions that control every aspect of the system. We all know that there is no transparency when it comes to the centralized conventional financial system as they try to keep everything private without the users knowing what happens in the system. This is where cryptocurrency shines. Cryptocurrency runs on the blockchain which means that every transaction is publicly available for anyone to see and anyone can have access to any information that is stored on the blockchain.

Transactions cannot be altered/manipulated

This is another very good benefits of cryptocurrency technology. One of the major flaws in the conventional financial system is that transactions can be altered. This means that the transaction record of funds transfer can be altered. However, this is where cryptocurrency shines because any transaction sent on the blockchain from wallet to another wallet cannot be altered and is visible for anyone to verify. This is great because people can send funds safely without any fear of loss of funds through institution manipulation.

Decentralization

Another benefit of utilizing cryptocurrency is due to decentralization. Decentralization is one of the key features of cryptocurrency technology. The main reason why blockchain and cryptocurrency were created is to bring decentralization to the financial system. A huge disadvantage of the centralized conventional financial system is that the central institution and authority have so much power and control over decisions in the financial industry which a lot of times are biased and not fair to the users. With cryptocurrency and decentralization, the will be no central institution and authority that have all the power and control over decisions in the financial industry. Instead, the power will be in the hands of the users who make the decisions and have control of their funds.

Transaction Cost reduction

This is also another very good benefit of cryptocurrency over the conventional financial system. At the moment, there is a high transaction cost to send money, especially from one country to another. This has caused a lot of people to look for alternatives to send money which can be problematic and stressful. Yes, there are other means to send money to people from one country to another with a much-reduced transaction cost, however, it would incur another delay before the person cashes out the money as physical spendable currency. With cryptocurrency, there is a much-reduced transaction cost compared to the conventional financial system. Sending money from one country to another is much faster and easier and the person would get the fund in their wallet in less time and can spend it anytime they want.

Speed

This is a really important benefit of cryptocurrencies. We all know that it can be time-consuming to send a simple money transaction to anyone, especially in another country. There can be a delay in the conventional financial system and can take days or even weeks before the money reaches the person in another country. Cryptocurrency solves that because anyone can send money to anyone anywhere at any time without delay and the person would receive the money in much less time. This is great for businesses and individual to send and receive money in less time.

Uninterrupted payment

This is another very important benefit of cryptocurrency over the conventional financial system. At the moment, there are still delays and interruptions in payments due to network issues or system failure… this can be frustrating to users as the interruptions can lead to loss of opportunities and delayed payments for urgent situations. Cryptocurrency solves these problems because there is no interruption in cryptocurrency payments as everything runs on the blockchain.

Why is a decentralized system needed?

A decentralized system is needed to solve some of the flaws in the centralized conventional financial system. The main reasons why a decentralized system is needed are;

• A decentralized system is needed to give users full control of their funds - This is one of the huge benefits of a decentralized financial system because there is no central financial system that controls the funds of users. In a decentralized system, users have full control of their funds safely stored in their non-custodial wallets that provided the keys or seed phrase. With this, users can make use of their funds anytime they want and anyhow they like without any central authority controlling the funds.

• A decentralized system is needed for higher security – This is because there is much higher security in decentralization compared to the centralized system. User funds are secured in a secured non-custodian wallet that provides keys. Funds in a centralized system is in the control of the central entity or institution which means that user funds can be at risk if anything happens to the financial institution or financial institution can take control of user funds. Also, in a decentralized system that operates using blockchain technology, data and information cannot be altered which increases security.

• Decentralized system is needed to give power to the users and removing the central authority that makes all the decisions in the system. In a decentralized system, the users make the rules and decisions by reaching consensus. Also giving everyone equal rights in the system.

• A decentralized system is needed for transparency. We all know that one of the flaws of the centralized system is that data and information is not transparent and can be altered or manipulated, however, in a decentralized system, data cannot be altered or manipulated because anything stored on the blockchain cannot be altered or manipulated.

• A decentralized system is needed to eliminate downtimes that can be caused by single centralized servers. In a decentralized system operating on blockchain technology, there are no downtimes because there are no centralized servers, instead, it makes use of multiple nodes that are run by users in the system.

• A decentralized system is needed so as to allow users to have full control of their financial decisions and services like in DeFi. In a decentralized system, there is no restriction on financial services like borrowing, lending, staking, allowing anyone to have access to financial services anytime they want at any time.

What affects the value of cryptocurrencies?

In the crypto space, there are factors that affect the value of cryptocurrencies in the market which causes volatility in the prices of various cryptocurrency assets. Some of the factors that affect the value of cryptocurrencies are;

Utility of cryptocurrencies

Utility is another very important factor that can drive the value of any cryptocurrency up. When there is a big utility and use cases of any particular cryptocurrency, the value tends to increase because there will be a high demand for the cryptocurrency because of the high number of use cases by different users. Binance Coin BNB is a clear example of a coin that has gained huge value over time because of the utility of BNB. Binance has a large ecosystem including the binance smart chain with a lot of projects on the binance smart chain, this has increased the utility of BNB because BNB is used in almost every aspect of the Binance ecosystem like paying for fees, using BNB to buy tokens on BSC, fee reduction on the Binance exchange, using BNB to pay for services on Binance.

High demand of cryptocurrencies

Supply and demand is a major factor that affects the prices of any cryptocurrency asset. When the demand is higher than the supply of a cryptocurrency, the value of the cryptocurrency increases. When a particular cryptocurrency is in high demand, there is a greater chance for the value to increase over time.

Low Supply of cryptocurrencies

Low supply is a big factor that affects the value of any cryptocurrency. Supply and demand are key economic factors that determine whether the value of any cryptocurrency would increase or decrease. For example coins with a very low supply tend to have high value over time than coins with an unlimited supply. In the cryptocurrency market, a good cryptocurrency project with a max supply of 20,000 coins would most likely have a higher value than a cryptocurrency project with a max supply of 200 trillion coins or with infinite supply.

Both positive and negative news involving the team behind the cryptocurrency project

This is a huge factor that affects the value of any cryptocurrency. When there is positive news involving the team behind the cryptocurrency project, people tend to FOMO in which can increase the value of the cryptocurrency. Also, when there is negative news or scandal involving the team behind the cryptocurrency project, it causes FUD which can cause the value of the cryptocurrency to decrease.

Sentiments and social media influencers’ tweets

Sentiments in the market and social media influencers’ tweets can have a major impact on the value of any cryptocurrency. When the sentiments in the market is on the positive side, it tends to increase FOMO which increases the demand for the cryptocurrency and also the value of the cryptocurrency. Also, tweeter has proven to be the home for crypto as almost all the news, reports and comments surrounding crypto, circulate on Twitter. Influencers who have a large following on Twitter can massively influence the value of any cryptocurrency with a single tweet. We have seen the effect of Elon Musk tweets on the market. Dogecoin and Bitcoin are two cryptocurrencies that have taken a swing from Elon Musk tweets.

Regulation

Regulation is also a big factor that affects the value of any cryptocurrency. We have seen so far the impact regulations from big financial countries like USA and China can have on the value of cryptocurrency. When there is a regulation that is negative, the value of the cryptocurrency assets tend to be affected as well and can cause a decrease in the value of cryptocurrencies.

Listing on top exchanges

This is one of the biggest factors that can increase the value of any cryptocurrency. Binance and coinbase listing is very powerful when it comes to increasing the value of any cryptocurrency. When a cryptocurrency is listed on top exchanges like Binance, Coinbase, there is a huge chance that the value of that cryptocurrency would increase as it would create a high demand and exposure for the cryptocurrency.

Why can't everyone be a miner?

In the cryptocurrency world, whenever the term mining is mentioned it mostly refers to proof of work mining blockchains like Bitcoin, Ethereum etc. Mining is basically the process of minting new coins and validating transactions on the blockchain network using high computational hardware and mining rigs required to solve complex mathematical puzzles and problems and also creating new block and validating the transactions for the blockchain network. Because of the problems associated with proof of work mining, it is difficult for everyone to become a miner;

High cost of acquiring mining hardware and rigs

Mining hardware and rigs have become very scarce and as such become very expensive to purchase because of the high demand and low supply of the mining rigs. There are not that many manufacturers of the mining rigs which has caused the rigs available to be very expensive for the ordinary user to afford.

High level of technical knowledge required

Becoming a miner isn’t easy as it requires a high level of technical knowledge to be able to set up a mining rig successfully. Most users who go into mining have very good technical knowledge when it comes to software, blockchain and other technical jargons that are required to be able to set up a mining rig successfully to mine cryptocurrencies like Bitcoin or Ethereum.

High power and energy usage

This is also a huge factor that limits everyone from becoming a miner. In some countries, most especially in developing countries and underdeveloped countries, electricity bills are very expensive. Mining rigs are power and energy-hungry which means that they consume a lot of power and energy which drastically increases the electricity bills. Because of the high power consumption of the mining rigs, electricity fees can go very high that it becomes unprofitable for miners in that country. High power consumption and high payment of electricity bills limit everyone from becoming a miner.

Why can cryptocurrency transactions be called more transparent?

Cryptocurrency transaction can be called more transparent because it operates on the blockchain and inherits the features and benefits of blockchain. Some of the reasons are;

Transactions on the blockchain is visible for anyone

This is one of the features and benefits of cryptocurrency and blockchain technology because any transaction on the blockchain is visible for anyone to have access to. Nothing is hidden on the blockchain which means that anyone can see any transactions that are made on the blockchain.

Peer-to-peer

This is another very important reasons why cryptocurrency transactions can be more transparent. Because cryptocurrency transactions are peer-to-peer sent from one wallet to another, there is transparency in the transaction and details of the transactions can be seen on the blockchain.

Use of smart contracts for financial services

Smart contracts can also increase the transparency of transactions because it means that there is no need for third party. We have seen the use of smart contracts in the DeFi space for financial services like lending and borrowing and also staking. Financial services transactions stored on the blockchain is visible for anyone to see and since there is no third party required in the process, it increases the transparency when it comes to lending and borrowing funds and also staking of cryptocurrencies to earn interests.

Decentralization

This is another reason why cryptocurrency transactions can be more transparent. Because of decentralization, there is no central entity or central institution that controls user transactions and funds… which means that users make all the decisions and have full control of their cryptocurrency transactions.

Explain the development of cryptocurrency in your country?

For me, cryptocurrency adoption is growing in Nigeria. Nigeria is one of the countries with the highest cryptocurrency trading volume which shows how popular cryptocurrency is in Nigeria. However, because of the government policies regarding cryptocurrency and the recent ban that was imposed on cryptocurrency in Nigeria, it has somewhat slowed down the adoption rate of cryptocurrency usage in Nigeria. While it is still possible to send and receive transactions through secure peer-to-peer, Nigeria hasn’t reached the stage where users can spend their cryptocurrency to purchase products and services because of the cryptocurrency policy and regulation in the country. Nonetheless, there are some private businesses that are accepting cryptocurrencies as payment options which is great as Nigerians continue to hope for a change in the policies and regulations affecting the growth and adoption of cryptocurrency in Nigeria.

In my opinion, the development of cryptocurrency in Nigeria is slow at the moment due to the government policies and regulations that have affected the growth and adoption of cryptocurrency usage in the country. However, the good news is that the number of Nigerians who are aware of cryptocurrency is increasing at a massive rate. This means that if the growth is much, it would put pressure on the government to have a change in the policies and regulations so as to accommodate cryptocurrency usage in the country. We all know the benefits of cryptocurrency in the area of security, decentralization and transaction speed, which can be beneficial for businesses, institutions and sectors in the country and in turn, increase the development in the country.

Conclusion

Cryptocurrency and its technology has proven to come with a lot of benefits. We have seen some of the benefits of cryptocurrency over the conventional financial system. So far, cryptocurrency is gradually gaining adoption as many industries, institutions, sectors, and reputable individuals adopting blockchain and cryptocurrency technology. When it comes to the benefits of cryptocurrency, blockchain is an integral factor because there will be no cryptocurrency without blockchain technology. With the continuous increase in cryptocurrency awareness and adoption, there is no doubt that there is a huge potential for cryptocurrency in the future.

@levycore