Crypto Academy Week 14 - Homework post for [@levycore] - Learn About Cryptocurrency - By @danimarvalentina

Hello everyone, I found the lecture by professor @levycore this week very interesting, since in particular I am new to all this and it seems very important to understand what cryptocurrencies are and how they work, to start this task I will explain them in a very simple that cryptocurrencies are and then I will go on to answer the questions assigned by the teacher for this task.

_{Image made by me in Canva}

Cryptocurrencies are an intangible and decentralized means of payment alternative to traditional money. That is, through these currencies we can carry out operations using digital encryption, which is equipped with security, without the need for intermediaries.

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

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There is a great difference between cryptocurrencies and the conventional financial system and, although both are currencies with a generic value and with which we can obtain goods and / or services in exchange, they can be differentiated in the following aspects:

Cryptocurrencies	Traditional
They are virtual	They are physical
They are global	They are located in a specific country or countries
Controlled by users or blockchain technology	It is controlled by central banks and economic reserves
They are part of the market	They are part of the economic system
Payments between individuals are made instantly and without intermediaries	Value transfers are slow and bureaucratic
They can be used by the whole society	Not everyone has the power to have a bank account
Costs are for software maintenance	Commission costs

2. Why is a decentralized system needed?

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Cryptocurrencies use blockchain technology, which consists of a decentralized database, in which data is inserted and consulted in the form of chained blocks, which cannot be modified or deleted. Reasons why a decentralized system is needed:

Generates a high security database (these cannot be altered).

The database is replicated and synchronized in as many sites as users use it.

Anyone can store cryptocurrencies

Payments can be made and received without any kind of intermediary.

Transactions are much faster and safer

The only inflation that the system represents is the supply / demand of the users

3. What affects the value of cryptocurrencies?

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The value of cryptocurrencies originates from the supply and demand of the tokens, each cryptocurrency is a world, its value is not connected to the behavior of a specific economy but depends on the supply and demand of the tokens.

Cryptocurrencies are not controlled by anyone, they are characterized by coming directly from blockchain technology, they do not need an economy to function, so they are less likely to suffer an economic crisis, because they have a fixed supply. Its value is supported by characteristics such as the speed at which the crypto-market changes, the increase in individuals trading cryptocurrencies, etc.

4. Why can't everyone be a miner?

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Cryptocurrency mining consists of miners receiving a mathematical problem every ten minutes and the fastest to solve it takes the new coins that are put into circulation.

The miner must decipher the mathematical problem based on random calculations, which will lead him to obtain the validation of the block and therefore will receive the rwcompensation once the members of the network confirm that the answer is correct.

Not everyone can be a miner, and here are some of the reasons:

High-powered technological equipment is needed, which has a high cost and not all people have the resources to acquire them.

The difficulty of the calculation to guarantee the validation of the block.

High cost of electricity consumption generated by cryptocurrency mining.

5. Why can cryptocurrency transactions be called more transparent?

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All cryptocurrency transactions are said to be transparent and this is mainly due to the fact that all operations performed on the blockchain are public, the blockchain file is stored on multiple computers on a network, and not in one place.

This type of storage allows all operations to be readable for all users, making this a transparent procedure and very difficult to alter.

6. Explain how the development of cryptocurrency in your country?

Development of cryptocurrencies in Venezuela

At the end of 2017 in Venezuela, the President of the Republic, Nicolás Maduro, announced the creation of the first Venezuelan cryptocurrency, "El Petro".

The creation of a blockchain observatory was approved as an institutional, political and legal basis for the elaboration of the national cryptocurrency. The currency is backed by national oil, gold, gas and diamond reserves.

This currency is used to carry out financial transactions and search for new forms of financing, as well as payment for goods and services over the internet; It is manipulated the same as bitcoin, opening spaces for Venezuela in global trade.

The petro is a virtual exchange currency that will offer more dynamism and security to our users when managing financial operations inside and outside their borders in the long term.

Conclution

Cryptocurrencies are the financial future of the whole world, this is due to its great advantages compared to the conventional financial system, the ease and speed with which operations can be carried out and the amount of economic benefits it brings to all who are involved. dedicated to working in the world of cryptocurrencies.

Without a doubt, the world needs a financial system that is decentralized, a system that is much safer, faster, effective, transparent and efficient such as cryptocurrencies and their blockchain technology.