Steemit crypto academy contest | s2w1 - how cryptocurrency shaped the financial realm. What is its future? by @ishayachris
Meaning of cryptocurrency.
Cryptocurrency simply refer to a digital payment system which doesn't depend on banks for it verification or transactions. Its a system which enable anyone to receive and send payment, which therefore means its a peer-to-peer system. Instead of carrying physical money around for exchange, cryptocurrency payments exist purely as digital entries to an online database describing specific transactions. When you transfer cryptocurrency, the transactions are recorded and saved in a public ledger. Cryptocurrency is stored and saved in digital wallets.
Bitcoin was the first cryptocurrency that became popular in 2009, and till date, it remains the most popular and the best crytocurrency. And much of the interest in cryptocurrencies is to trade for profit.
How cryptocurrency works
Units of cryptocurrency are created through mining process, which involves using computer to solve difficult and complicated mathematical problems that helps to generate coins. And users can store and spend their currencies using cryptographic wallets after buying the currencies from brokers.
If someone owns cryptocurrency, you don’t own anything tangible. What you own is a key which allow you to move a record or a unit of measure from one person to another person without a trusted third party.
Bitcoin has been around since 2009, since then, cryptocurrencies and applications of blockchain technology have been emerging in financial terms, and more uses are expected in the future.
Examples of cryptocurrency.
Today we have thousands of cryptocurrencies which are in use around the world. But some of the most popular cryptocurrencies are:
- Bitcoin
- Ethereum
- Litecoin
- Ripple
- steem
- Doge
- Dash
- Hive
Comparison between cryptocurrency and conventional currencies.
S/n | cryptocurrency | conventional currencies |
|---|---|---|
| 1 | cryptocurrency is a digital payment system which doesn't depend on banks for it verification or transactions. | conventional currency is a form of money that is centralized, backed, and managed by a recognized government entity. |
| 2 | It is not possible for someone to have a physical feel of cryptocurrencies because they are operated online as virtual coins. | on the other hand, conventional currencies have a physical aspect because they can exist as coins and notes, as such its possible to have a physical feel. |
| 3 | Cryptocurrencies exist only in digital form because, they are created by computers and operate as private pieces of code. Which means exchange is purely digital. | conventional currencies can exist both in digital and physical form. Electronic payment services allow people to transfer convention currencies digitally, and people can also transact with one another and exchange currencies physically. |
| 4 | cryptocurrencies have a specific cap when it comes to supply, that's to say there is a set amount of coins that will ever be in supply. For instance, the total number of Bitcoin coins that will ever be in supply is capped 21 million. | conventional currencies have unlimited supply which means central authorities have no cap to the extent in which they can produce conventional currencies. |
| 5 | Cryptocurrency can only exist online thereby stored in digital wallets which is commonly referred to as cryptocurrency wallets. | other hand, conventional currencies can be stored in various forms. For instance, there are payment providers such as PayPal that allow people to store conventional currencies in digital form, and Banks also do act as custodian of conventional currencies. |
| 6 | cryptocurrency is decentralized | conventional currencies are centralized. |
Explain the distinctive innovations of cryptocurrency and its downsides.
Cryptocurrency came with so many distinctive innovations that cannot be overemphasized because of how it have made financial aspect of life so easy for man. Although it have it downsides.
The most vital distinctive innovation that cryptocurrency came with is decentralization. And decentralization have a lot of benefits. Below are some of the benefits of decentralization.
It help to eliminates the fees that banks and other financial institutions charge for using their services.
it help to secure money which is in for of currencies in a digital wallet instead of keeping it in a bank.
With internet connection, anyone can use it without any thirty parties approval.
user have total control over his or her currency or money
with decentralization, currencies or money are secured from thief's and hackers.
The downsides of cryptocurrency
Unregulated Markets: First of all, the biggest advantage of cryptocurrencies is it ability to function without the existence of a central bank that coordinates their activities. However, this is also the greatest disadvantage of these investments. since there is no central bank or exchange which mediates all the transactions, most of them are irreversible. Secondly, since there is no government which enforces its value. Therefore, value of the coin is purely determined by the value which peers investors place on it. Which means, if the investing community were to lose interest in a particular cryptocurrency because of a security incident, the units of that currency could become worthless overnight.
Data Loss: The money invested in cryptocurrencies is held in digital wallets that are protected by digital passwords. If in any way the owner deletes these passwords and is not able to recover them on his own, then there is a big possibility that the currencies locked in the digital wallet may become inaccessible to them.
Power lies in few hands: though cryptocurrencies are known being decentralized, the flow and amount of some currencies within the market are still controlled by their inventors and some organizations. These holders can easily manipulate the coin for enormous swings in its price. Even hugely traded coins are at risk of these manipulations just like Bitcoin, whose value doubled several times in the year 2017.
No refund or cancellation: If in anyway there is a dispute between concerned parties, or if someone mistakenly send currencies to a wrong wallet address, the coin cannot be retrieved by the sender.
High consumption of Energy: Mining of cryptocurrencies consumes plenty of computational power and electricity input, making it highly energy-intensive. For instance, Mining Bitcoin requires advanced computers and plenty of energy. Which means One cannot do it on ordinary computers.Bitcoin miners are in countries like China that are able to use coal to produce electricity. It has lead to increase in China’s carbon footprint tremendously.
How do you think major problems with cryptocurrency can be handled? Let this be a response to the downsides highlighted earlier.
Considering the fact that any problem always have a solution, so it is with cryptocurrency. Below are some of the ways in which some of the major problems can be tackled.
First of all, cryptocurrency should be made in such a way that it value will not dependent mainly of the peers that invested into it. If that can be done, there won't be instability in the value or amount of the currencies even when one investor decide to take away his share.
More to that, the platform should be made in such a way that, the someone can easily get back his coins when mistakly transfered to a wrong account.
In addition, there should be way in which the owners of cryptocurrency can regain back the password of account if forgotten or deleted
Do you believe in the future of cryptocurrency? State your reasons. Any Recommendations?
I so much believe in the future of cryptocurrency because ever since it came into existence, it have been profiting a lot of investors. When Bitcoin first came into existence, people mined it free, but today Bitcoin is around 18 million. Which therefore means, it have took a lot of people out of poverty. More to that, it was able to tackle some of the downfall it experienced at early stage, which therefore means, it have the capacity to withstand and tackle any challenge that might occur in future. Also, since cryptocurrency is a decentralized system, one can make transaction without the knowledge of any third party. In that case, you are sure that each and every transaction you make is secure. As such, I believe in the future of cryptocurrency.
Recommendation
Its always a nice idea to invest in cryptocurrency, because with time, it will profit you. But I recommend that before anyone invest his or her money on any cryptocurrency, the person should make intensive research on the history of the currency, and also the market value and stability of the currency, in order to avoid regret in future.
Conclusion
Cryptocurrency is here to stay, and it have a great future ahead, due to the fact that it runs in a decentralized system. As such, it will always be hard to hack it. More to that, despite some of the challenges it have faced in the past, it is still profiting it investors.
thanks for reading me through
I invite @simonnigwe, @yakspeace, and @patjewell to participate in this contest.
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Thank you for the correction sir
You are right man, crypto currency is here to stay for us oo, no leave no transfer.
Indeed you were right because since I was born till now I have never physically seen or felt any crypto currency before neither have I heard that anyone have.
But you get mind ooo, you the metion your last option in steemit, hmmm
To be sincere I don't rate the last option as part of crypto currencies since I heard their history.
Mean while thanks for sharing and I wish you success
Thank you sir
Very educative entry and explanation of cryptocurrency, stable coin has really been my saviour on cryptocurrency.
Keep it up bro
Thank you sir
You have shared a very nice post with us and it is very good that you have entered today. You have presented very nicely about the cryptocurrency. What it is and how it works. You have also shown some examples. Excellently you have differentiated between conventional currencies. You also mentioned the innovations of cryptocurrency and can be used without third party control. It is much safer because it is decentralized. Thank you so much for sharing with us.
Thank you so much sir. Your comments are really appreciated
Great advice to new users... do your homework!
I've learned a lot about cryto currencies over the last 1,5 months and I cannot help to wonder when I will know enough to use it as an investment. There is just so much to learn!
I agree, I cannot see that it will ever disappear regardless of various government regulations.
Great post! Best wishes for the contest!
Ps. I will drop my entry soon Solomon (•ิ‿•ิ)
Thank you so much ma'am. I can't wait to read your entry.
Thank you for publishing an article in the Crypto Academy community today. We have accessed your article and we present the result of the assessment below
Comments/Recommendation
You need to put in more quality time for this contest and also try to explore more in your explanations. Thank you for participating in this contest.
Total|6.5/10
Thank you sir. I will do better next time
Yes oooh, cryptocurrency is here to stay for good 🤗
You have explained your view about the crytocurrency so well and it's easy to understand, seriously reading through your article I most say that, you have taken your time to explain what cryptocurrency is and also you were able differentiate it with the traditional currency. I'm very impressed with your work keep it up. And I wish you all the best in this Contest.
Thank you so much dear. I really value your comments
You are welcome 😊
Well detailed post, i really like your effort. Keep it up bro 👍👍
Thank you sir
That was a very educative posy to read, you really took your time to explain it well to the understanding of all of us
Thank you for your kind comment sir
Great effort by you dear brother in explaining the post in an impressive manner. Yes, cryptocurrency is the decentralized payment system that can work without the central authorities.
Yes, this point is absolutely true as we know that the large hands of the market play tricks with the short traders and this is really injustice. Thanks a lot for sharing your thoughts woth us.
Thank you so much sir.