Crypto Academy season 2 week 6- Homework Post for @levycore| 'learn about cryptocurrencies'|

Cryptocurrency, which dated way back to 2008 with the establishment of Bitcoin revolutionized the entire financial system. In making a comparison between cryptocurrencies and the conventional financial system, the main feature to elaborate upon is the system of organization.

Cryptocurrency, opposed to the traditional financial system, is a decentralized global digital instrument completely free from the control banks and other financial institutions exert. They are not backed by any central government, neither are they in the hands of a single authority as the term "Decentralized" implies. Cryptocurrencies as means of exchanges are fully secured with the use of encryption and cryptographic techniques.

The centralized financial systems are centralized and hence there is the presence of a central authority. Being centralized, financial institutions have to rely on databases for their transactional information.

Both in essence are used as a medium of exchange and store of value

Why is a decentralized system needed?

While many systems such as the Centralized, distributed and decentralized exist, the need for a decentralized system is to reduce the level of trust that participants in a network place on one another and displace the authority to exert authority and control over one another within a network. The idea behind a blockchain is usually to create a trustless network whereby, rather than users having a reliable authority preside over a network and keep ledgers, everyone keeps an eye on everyone else and the need to know or trust anyone in the Network is removed which in turn sets in protocols to prevent bad behavior.

What affects the value of cryptocurrencies?

Supply and demand is a big factor that influences any good that can be tagged as an economic good. In conformity with the laws of demand and supply, the higher the demand for a good the more the price increases, therefore if more people are willing to buy a coin than sellers in the market, the price of that asset/instrument will go up and vice versa.

Conversely, if a cryptocurrency has a high token supply and little demand from traders and users the value is drop.

The factors affecting price go past just the concepts of demand and supply though. There are also some factors that come to play in the determination of an instrument/asset value. i.e

Pumping and dumping

Through the knowledge of the relationship between demand and supply, the value of a cryptocurrency can be manipulated through a concerted effort to match all open orders on a particular exchange which often creates artificial scarcity. When the price of this financial instrument eventually adjusts large holders of the coin will sell by dumping their coins, bringing the value of the cryptocurrency down.

Media authority

There are myriad news outlets and personnel dedicated to covering news and information about cryptocurrency. Often, messages passed across these outlets tend to affect the market of a particular currency. Take one major market mover of late Elon musk as a case study. Lots of traders watch out for his tweets and would often react in the direction it sends the market often causing a pump or dump in the market.

Why can't everyone be a miner?

Being a miner, apart from being extremely expensive to set up a mining rig and manage often involves incurring a lot of costs. Apart from the cost of acquisition of a mining rig, the cost of electricity is another big issue to contend with. Oftentimes, small-scale miners discover they're making more losses than gains from mining as hardware components eventually get weakened and electricity costs skyrocket. Buying and holding BTC with $10k is profitable than getting a mining rig setup and mining. In the long run, with that capital, more expenses would be made.

Why can cryptocurrency transactions be called more transparent?

The concepts of cryptocurrency begin with an underlying technology called blockchain. One of its core features includes transparency which allows customers to hold the business they work with accountable. Before the existence of blockchain, banks, and other financial institutions often had some sort of absolute control as they could anonymously do whatever they deemed fit with the assets of their account holders.

Cryptocurrencies, through the employment of its underlying technology blockchain, force businesses to act within a spotlight as their activities can be closely and undeniably monitored on the blockchain hence exposing the truth of the actions and decisions.

Explain how the development of cryptocurrency in your country?

The development of cryptocurrency in Nigeria is an interesting one. The concept that cryptocurrencies were scams was widely believed at its inception and still does on a smaller scale today. However, people began adopting the concept and Nigeria became one of the largest Bitcoin markets. More cryptocurrency trading goes in Nigeria than almost anywhere else in the world (arguably). A survey was once conducted in 2020 by data platform Statista and it was discovered that 32% of those Nigerians who took part used cryptocurrencies - the highest proportion of any country in the world.

According to general estimates, it's revealed that of the top 10 countries for trade volumes, Nigeria ranked third place just after the US and Russia in 2020, generating over $400m worth of transactions.

Cryptocurrencies are becoming more prominent than ever and even triggered the government to act against this in a bid to protect the power of their financial institution's authority (in my opinion - a fundraiser during a time of crisis once held and banks refused to service that fundraiser so people resorted to using crypto) which eventually prompted the government to ban financial institutions from servicing crypto exchanges on the 5th of February 2021. Two of such bans have existed in the history of Nigeria and cryptocurrencies.

It became increasingly difficult at first but then the P2P markets are always there so it forced traders to evolve. The action created an opposite reaction and popularized the concept of cryptocurrencies and hardly would I see someone in a week that doesn't want to learn a thing or two about cryptocurrency.