Crypto Academy HomeworkPost Season2week6 for Professor @Levycore by @Nikoyana

1)What is the fundamental difference between cryptocurrency and conventional financial system?

Conventional financial system comprises of

a)Banking Institutions that accepts deposits and withdrawals.

b)Non bank financial institutions such as insurance firms, micro finance, mortgage banks etc

c)Financial market such as money market and capital market.
All these institutions make use of one currencies such as dollars, naira, pounds, yen etc all these currencies are termed fiat currencies.

Whilst
Cryptocurrency are digital assets used and exchanged for transactions online and makes use of a blockchain technology where all transaction datas are recorded.
Example ethereum,bitcoin,eos cardano,steem etc.

The fundamental difference between them are as follows:

a)Cryptocurrencies are virtual or digital asset traded online and not in physical nature while conventional financial system makes use of fiat currencies such as dollars euros etc and these currencies are been traded in thier physical nature.
Moreover when fiat currencies are been kept in bank account they can be traded online too.

b) Conventional financial system are regulated by apex banking authorities in the country and government of the country while cryptocurrencies are not controlled by any government or any apex authority.

c)Conventional financial system accepts only fiat currencies for transaction while in cryptocurrency fiat currencies can be used to obtain or purchase cryptocurrencies or cryptocurrencies can be sold for fiat currencies in other words cryptomarket makes use of both fiat currencies and cryptocurrencies.

d)Conventional financial system transactions are been confirmed by the bank while in cryptocurrencies transactions are been confirmed by all the nodes in that blockchain network and if there is a transaction between A and B and B defaults the transaction will be rejected by the nodes in the blockchain network which makes it more transparent.

e)Transactions some time with conventional financial system may hang or delay where as in cryptocurrencies as long as the payment are been made by the sender the receiver receives it immediately.

2)Why is decentralised system needed.

Personally i think decentralised system is needed to enable users have full control over thier account since decentralised is not subjected to any authority and no authority or third party can have access to your funds.

For example let's take the bank which is a centralised system for example if a customer of a bank Mr A is been investigated by the lawcourt or is been tagged as a suspect, the court can order the bank to get the information of Mr A's account thereby after so much investigation,the law court can order the bank to freeze Mr A's account whereby Mr A is just a suspect this happened because the bank have access over Mr A's account but in decentralised system which is not subjected to any authority such cases will not be possible because there is no third party or controlling authority who will reveal Mr A's transaction details.

Moreover since decentralised system is controlled by all the participants in that particular network and not one major server there will be no single point of failure since there are many servers in the network as compared to centralised which has one single point of failure because it has one central server which is connected by every other servers because of this anytime the main or central server shuts down or faults every other server connecting it shuts down too.

Furthermore a decentralised system is difficult to hack since it's data are stored on many servers while centralised is somehow easy to hack since data stored here are on one server, when such situation occurs then all the servers data connecting to the main server are been exposed.

Finally with decentralised system Mr A can transfer funds in Accra to Mr B in Lusaka with no limit boundary and faster.

3)What affects the value of cryptocurrency?

Supply and demand affects the value of cryptocurrencies. For example 21 million worth of Bitcoins are been mined so when the demand exceeds that particular number the value will increase and when the demand decreases more than the supply the value will decrease.

Moreover when emerging cryptocurrencies with constant increment in thier values and also performing well by increasing in value steadily may affect other major cryptocurrencies.

Furthermore influential figures may also affect the value of cryptocurrencies such as in the case of Elon musk when he tweeted that Tesla can now be bought with bitcoin increased the demand which led to the increment in value and also when he tweeted that he may sell his holdings of bitcoin brought about the fall in the price of bitcoin.

4)Why can't everyone become a miner?.

Crypto mining means gathering of cryptocurrencies by solving complex cryptographic puzzles through the use of devices and recording the data on blockchain.

Everyone cannot become a miner because to mine involves purchasing of expensive devices such as ASIC or computers .
Inorder to mine these devices make use of excessive electricity which is very costly to pay for.

Based on volatility of cryptocurrencies it may appear that after the miner have invested and purchased expensive computational devices and these devices make use of huge and costly electricity.

After all these investments in mining, the cryptocurrency may have a big dip and the miner may end up spending more to mine than the reward the miner receives which will lead to loss.

5.Why can cryptocurrency transactions be called more transparent.?

Cryptocurrency can be called more transparent because it involves a peer to peer system of transaction(that is human to human with no involvement of third-party) and these transactions are been termed valid after been confirmed by nodes within the blockchain network.If any of the parties transacting fails to perform his/her part the nodes within the network will not confirm the transactions and with that transaction will not be termed valid.
Moreover any of the parties can access any transaction history on the blockchain since all the datas in a form of block are connected on the blockchain and these datas on the blockchain cannot be altered by third-parties as in the case of centralised system.

6)Explain how the development of cryptocurrency work in your country.

Nigeria my country remain the third country in cryptocurrency(particularly bitcoin) transaction behind Russia and USA.
For the past 5 years 566,000,000 dollars crypto transactions have taken place in Nigeria,this raised the eyebrows of the CBN(Central Bank of Nigeria) because it is affecting the sale of naira,many people in Nigeria are selling naira to buy cryptocurrency which in turn reducing the value of naira,based on this observation the (CBN) from 2017 started putting some limits such as ordering all banking systems to avoid carrying out cryptocurrency transactions with any account.This step crippled many big investors and traders of cryptocurrency in my country.The CBN came out to back thier order that cryptocurrency is not under the laws of thier banking system but we are hoping with time this order will be reversed.

Conclusion

The only problem cryptocurrencies have is no regularisation so because of this thier dip in price is so enormous and very deep but cryptocurrency comparing the value from time has been increasing in value for example the value of 1bitcoin now is more than the value of 1bitcoin eight years ago but the value of 1naira eight years ago is more than the value of 1naira now, with this apart from the volatility i think cryptocurrencies are the gateway to the future.

cc:
@levycore