Crypto Academy Week 14 - Homework Post for [Professor @levycore] by @huzaifanaveed1
The year is 2070. The world as we know it has evolved a lot. Every thing is virtual. From virtual houses to virtual telecommunication to virtual currencies.
No one depends on the banking system anymore. It's outdated. No one wants the hassle of the inclusion of a third party in their transactions.
Conventional banking system is totally out of the books. The government and the banks do not control your assets anymore and neither can they devalue your money by printing more and more of it. It's an ideal world we are living in.
But wait a minute, why 2070? We are living through this phase right now. People are starting to reject the conventional banking system and coming towards the decentralized crypto system and in a few years we'll be able to experience it.
This lecture mainly focuses on the learning of cryptocurrency and why it is very important in our lives.
Q1)
Lets start with the most important and the most prominent difference between Cryptocurrency and conventional financial system is that cryptocurrency does not need a third party inclusion whereas the conventional financial system requires an intermediary.
For example I want to send some money to my friend living in some other country. If I go for the conventional system. I will have to send the money through bank. Then my friend will also have to go to a bank in his vicinity. There he will have to fill forms, stand in lines, waste his time and then withdraw the money. Furthermore, a small amount of money will also be cut in this whole process
Meanwhile with cryptocurrency, it does not require any middleman. It is independent of the banking system and the government. Its price does not fall like in banks, when they print more money. If I have to send money to my friend in a different country, I can directly send him in his crypto wallet and he will receive it without any hassle or deduction of taxes.
Lets take a deeper look at the differences
| COMPONENT | CONVENTIONAL FINANCIAL SYSTEM | CRYPTOCURRENCY |
|---|---|---|
| IDENTIFY THEFT AND FRAUDS | in this system all your data is with the banks and the government. You can be tracked at any given time | in cryptocurrency transactions your anonymity is preserved |
| NATURE OF CURRENCY | Physical | Virtual |
| CONTROL | Centralized. Controlled by the government and banks | Decentralized. Controlled by users and blockchain technology. |
| PROCESS | transactions are extremely slow. Might take days | user to user transactions are done in seconds |
| EFFECT OF INFLATION | Affects a lot. The currency value basically depends on this | Does not affect cryptocurrency |
| ACCESS | Not everyone can afford opening a bank account | literaly almost everyone owns a cellphone. Could be done on that |
| FEE CHARGES | Transaction processes charge high fees | very little or no transaction fees. |
| DIVERSITY | usually branches of banks are not in every country | It is absolutely global. |
| USAGE | Easy to use and understand | requires good skills |
Usually the Cryptocurrency is global but as we're still revolutionizing, Cryptocurrency is still limited in some countries.
*Hope all the differences are crystal clear to each and every one of us.
Q 2)
First we will have to understand what is a decentralized system?
When the activities of any organization or the transfer or ownership of any Currency is not in the control of a single entity, it is known as a decentralized system
The control is diversified between many users.
So, why is it needed?
Firstly if we only talk about a decentralized social media
Decentralized social media provides you total freedom. You are free to express your views on this social media without the fear of getting banned and blocked. This type of social media is not controlled by a sole authority. The control is with the users.
Below are some differences between centralized and decentralized social medias
| Constituents | Centralized | Decentralized |
|---|---|---|
| Authority | authority is completely in the hands of the single party who owns the network | authority is with the users |
| Safety of accounts | NO | YES |
| Interface | friendly and good | complex |
| Chances of hacking | easily hacked | difficult to hack |
| USE | easy to use | complex |
Secondly
Decentralized system creates diversification between the mass as it takes away the power from one unit entity
You might take this point in two different tangents
a) it takes off some huge burden off the shoulders of the directorial board. More people are involved in this and creates a diversity. More opinions are presented which enhances the quality and time management.
b) If you look from a different perspective, it strips off the power from one controlling person or entity. The power is with the personnels and users.
Thirdly
As previously mentioned, not a single hierarchy is in power so different opinions and ideas result in Quick results and decisions
Fourthly
When every individual has the authority of making decisions, you'll expect them to have excellent grip on the things they're working on. This will increase efficiency
So these are the reasons why a decentralized system is needed. In my humble opinion it is the need of the time
Q3)
Supply and demand
It is a very common term in the market and also very easy to understand.For instance in an area there is a common viral infection going on which can be cured by only one particular medicine. The demand of that medicine automatically goes skyrocketing. Becuase if increasing demand, there will be shortage of supplies. When there is shortage of supplies, the price of that medicine will increase consequently. Its easy economics.
The same is with the Cryptocurrencies. If a demand of a particular coin increases, its price will increase
BULLS AND BEARS
If you're not aware of these terms in the market. Bull means investors who invest a lot of money in the market which takes the value up of the market and the bears withdraw money in huge sums which regresses the market.
INFLUENTIAL PEOPLE
A very important point we CANNOT miss is the influence of famous people who are in the market. The best example is of Elon musk. Below are some screenshots of his tweets which shook the cryptomarket
FEB 8 2021
𝑻𝒆𝒔𝒍𝒂 𝒃𝒖𝒚𝒔 $1.5 𝒃𝒊𝒍𝒍𝒊𝒐𝒏 𝒃𝒊𝒕𝒄𝒐𝒊𝒏𝒔. 𝑷𝒍𝒂𝒏𝒔 𝒕𝒐 𝒂𝒄𝒄𝒆𝒑𝒕 𝒊𝒕 𝒂𝒔 𝒑𝒂𝒚𝒎𝒆𝒏𝒕.
as a result the bitcoin price skyrocketed
𝘴𝘤𝘳𝘦𝘦𝘯𝘴𝘩𝘰𝘵𝘴 𝘧𝘳𝘰𝘮 𝘵𝘳𝘢𝘥𝘪𝘯𝘨𝘷𝘪𝘦𝘸.𝘤𝘰𝘮
MAY 10 2021
𝑺𝒑𝒂𝒄𝒆𝑿 𝒕𝒐 𝒍𝒂𝒖𝒏𝒄𝒉 𝒂 𝒔𝒂𝒕𝒆𝒍𝒍𝒊𝒕𝒆 𝒇𝒖𝒏𝒅𝒆𝒅 𝒃𝒚 𝑫𝒐𝒈𝒆𝒄𝒐𝒊𝒏
as a result DOGECOIN prices significantly rose
𝘴𝘤𝘳𝘦𝘦𝘯𝘴𝘩𝘰𝘵𝘴 𝘧𝘳𝘰𝘮 𝘵𝘳𝘢𝘥𝘪𝘯𝘨𝘷𝘪𝘦𝘸.𝘤𝘰𝘮
MAY 13 2021
𝑻𝒆𝒔𝒍𝒂 𝒔𝒕𝒐𝒑𝒔 𝒕𝒂𝒌𝒊𝒏𝒈 𝒃𝒊𝒕𝒄𝒐𝒊𝒏 𝒂𝒔 𝒑𝒂𝒚𝒎𝒆𝒏𝒕
as a result BTC prices crashed
𝘴𝘤𝘳𝘦𝘦𝘯𝘴𝘩𝘰𝘵𝘴 𝘧𝘳𝘰𝘮 𝘵𝘳𝘢𝘥𝘪𝘯𝘨𝘷𝘪𝘦𝘸.𝘤𝘰𝘮
As you can see how huge the impact if news is on Cryptomarket.
Q4)
Mining is a process in which you get Cryptocurrencies by solving difficult puzzles and stuff. It requires a proof of work algorithm. It is a system of mining which involves solving puzzles to validate a transaction and create your currency.
Another algorithm is the proof of Burn in which the miners burn their already owned assets which is termed as an investment. This investment is used as a resource in favour of the miner.
The more coins you burn, the more you invest in the mining rig, the more chances you have to be a block validator.
These above concepts I got from the previous lecture thanks to professor alphax.
But Not everyone is capable of doing this. Not everyone is capable of being a miner.
Requirements of being a Miner
a) you must have extremely diversified knowledge about the Cryptocurrencies and the cryptomarket. Without that your chances are none.
b) Have an absolute grip on the Consensus Algorithms for example Proof of work proof of stake, proof of burn and so on*
c) Need High level machines for example, ASIC. The machines and computers require huge amount of electricity.
d) The cost for these proccesses is extremely high and not everyone can afford it.
e) You have to be cautious about the environment as well. The process of mining is not significantly Environment friendly so you have to take care of that as well.
Q5)
You must keep this in mind that all the transactions carried out on any Cryptocurrency is noted on the blockchain and it is absolutely transparent as everyone can see it.
The best example we have is of the Steemit platform.
Here everything is transparent. Anyone can have a look on my profile. My history of transactions. My wallet. Its all transparent and the chances of any kind of fraud is very low.
Secondly
As the Cryptocurrency is a decentralized system. Every user has the independency of making decisions. This makes it easy for supervision and transparency.
Thirdly
No third party is included. I mean what better could be than this? There's no middleman. Its a user to user interaction without any intermediary. This enhances the transparency in a huge way.
Fourthly
The information fed in can't be edited or deleted. It is all saved in a blockchain
Q6)
With a very heavy heart I am writing this that in April 2018 State bank of Pakistan banned all Cryptocurrencies
It is not legal to buy Cryptocurrencies in Pakistan but still people are trying to make way of it in our country
If I were to give credits to someone for the inclusion of Cryptocurrency in the minds of Pakistanis it would have to be Waqar Zaka. For those who do not know him. He is a *Pakistani television host, activist and a crypto entrepreneur.
He has been continuously working on the cryptomarket and has attracted millions if Pakistanis towards this domain.
For that he even has a group on facebook where he gives his expert advice to all the members who have subscribers. The subscription cost is around $15 a month.
As of now only this Guy has been working for the betterment of the cryptomarket in Pakistan. I hope in coming future more people step forward and we finnaly can have cryptocurrency in Pakistan
This assignment was one of my favorites to do. It took me alot of time compiling this but I'm glad I took my time as I got to learn a lot of things in the process
This assignment given by professor @levycore covers all the important points regarding the Cryptocurrency.
We learned the differences between the conventional financial system and Cryptocurrency and got to know how world is moving towards virtual currencies.
Then we got to know about decentralized system and its importance in the market as well as in all the domains.
We shed some light on the factors which affect the value of cryptocurrencies
Mining is an important process but now everyone can be a miner. We learned this in an efficient way.
Transparency, no matter where is extremely important and that is what the most important thing about cryptocurrency is. We learned about that
Lastly we learned the development of cryptocurrency in our countries respectively
This assignment did take a lot of my time but I enjoyed making it. Hope you have a good read as well
Regards,
@huzaifanaveed1
So well explained!
Thank you so muchh
Hi @huzaifanaveed1 , Thanks for submitting your homework
Feedback: You have completed every point and you have understood the basics of cryptocurrency
Rating: 7