Crypto Academy Week 14 | homework post for @levycore | learn about cryptocurrency | by @loveth01.

Image Source

DIFFERENCE BETWEEN CRYPTOCURRENCY AND CONVENTIONAL FINANCIAL SYSTEM

Looking at the fundamental aspect, when we talk about the difference between cryptocurrencies and traditional coins (the physical ones).
Cryptocurrencies are born to be an alternative payment method to traditional currencies. let start from,

Traditional coin: The latter also take the name of Fiat Money (fiat coins) which by definition are currencies issued by a government (for example, the Italian one) and then regulated by a central authority (the Bank of Italy and, more recently, the ECB). When it comes to ordinary currencies, the reference is also to legal tender coins which can be physical (coins and banknotes) but also on credit, as is the case for payments with various credit cards. Why

Cryptocurrencies: A cryptocurrency is a decentralized and virtual currency that does not respond to any control by governments or central banks. Virtual assets that use cryptographic technology to process secure and verify transactions. Transactions that are recorded within a database like a blockchain that no one can modify or manipulate.

WHY DECENTRALIZED SYSTEM IS NEEDED

With decentralized finance there is no longer any intermediary. So it is no longer necessary to ask for a loan to be able to obtain it, and for example go through an investigation that will decide whether to disburse it or not. In fact, it will be sufficient to load the guarantees on a special smart contract, and this will automatically disburse the loan immediately and without the risk of receiving a refusal - provided that sufficient guarantees are provided, and that there are other users willing to disburse the credit.
In fact, DeFi, given the total lack of intermediaries, is P2P, i.e. it puts money lenders in direct contact with aspiring debtors, for example, using interest rates as a parameter to decide who the money lent will go to. That is, the money made available by the lenders will be distributed to the aspiring debtors who will agree to pay higher interest, as if it were an auction. Let's take an example. If you need a loan, with the traditional financial system you need to contact an intermediary who will evaluate the loan request, ask for guarantees, and decide whether to provide it or not.

All this is handled automatically by public computer codes, verifiable by anyone, whose behavior is perfectly predictable, fundamentally based on anonymity and basic market logic. In short, DeFi completely eliminates the discretion of classic intermediaries, delegating the entire management of the system only and exclusively to smart contracts, which are precisely the public computer codes, verifiable by anyone, and with predictable behavior.

Of course, due to its completely disintermediated nature, and based on rigid IT logic, the elimination of discretion also produces some limits, such as the impossibility of obtaining a loan without adequate guarantees, which moreover must be integrated into a smart contract (in fact they are generally cryptocurrencies). But this is only the first concrete step of what is proposed as a real, unstoppable revolution to create a parallel financial system capable of reaching where the traditional system has never managed to reach.

FACTORS AFFECTING THE CRYPTOCURRENCY MARKET.

With thousands of cryptocurrencies in existence, understanding the cryptocurrency market can be a challenging task, especially for beginners. So here are some of the major factors affecting the cryptocurrency market
.

1. Update to the code

One of the main factors affecting the price of the cryptocurrency is the code updates. Why?
Well, the cryptocurrencies are constantly changing with new items added frequently. Usually, updates are added to the code to improve the performance of the cryptocurrency and improve the adoption of decentralized finance globally.

1. Supply and demand.

Supply and demand are a crucial principle in the financial sector, particularly in cryptocurrency investments. This is a pretty simple factor to watch out for; a factor that affects everything you trade (be it stocks, forex or cryptocurrency).
The shorter the supply, the higher the value; the higher the supply, the value will experience a decrease. It is no secret that the effect of supply and demand inflation and deflation is significant. The higher the demand and the lower the supply, the higher the price of a cryptocurrency.

1. Cost of production

Cost of production is another factor affecting the cryptocurrency market. The mining process is related not only to supply and demand but also to costs. When it comes to Bitcoin, for example, we have to mention that the mining or mining process becomes increasingly complicated and expensive , with an expected block time of 10 minutes.

1. Scandals involving developers

Believe it or not, when the developers are involved in a scandal, it has a great effect on the price of the currency. And there is always drama in the cryptocurrency industry and a lot of misunderstanding between projects.

WHAT IS MINING?

Mining is a procedure that is used to verify the authenticity of transactions. The bitcoin is said to be decentralized, this is to say that nobody controls it, this makes the task of verification genuine since it is not left to the users.

Can everyone go into mining?

The answer is NO, mining is not easy to venture into let takes BitCoin as example. BitCoin mining is only lucrative for large groups (or pools) of users. They try to estimate the right number and divide the reward between themselves. Its much more likely for you to win a lot of lotteries in one day than for you to estimate the right number required for mining the next BitCoin block.

WHY IS THE CRYPTOCURRENCY SAID TO BE TRANSPARENT

From the analysis of the cryptocurrency above, we can deduce the answer to this question, it is said to be transparent because it doesnt involve a middle man, and all the processes for transaction can be accounted for.

APPROACH TO CRYPTO-CURRENCIES IN NIGERIA

One of the actions that the Nigerian government has carried out is by giving out very strong notices on the consequences of investing in the crypto currency markets. This warnings were given out by the CBN and the Securities and Exchange Commission. and right now cryptocurrency is not legal in Nigeria and at a point they were closing up account of those involved in cryptocurrency.

In conclusion,
cryptocurrencies is one thing I have fallen in love with and I prefer it than traditional coin even do Nigeria government said they are against it I will continue to learn about it. I know one day they will see the need to accept it .

Thanks to professor @levycore this is my homework post.