Steemit Crypto Academy Season 4 Beginners Fixed Course - Homework Post for Task 5: Bitcoin, Cryptocurrencies, Public chains. by @sadiqxylo
Hello Everyone,
I am much grateful to participating in this fixed course task (Homework Post for Task 5) by prof at @stream4u. The detailed lesson provided on Bitcoin, Cryptocurrencies, Public chains was very comprehensive. Below are my submission for the task.
What Is Cryptocurrency and How You Would Like To See Cryptocurrency In The Future?
Cryptocurrencies are digital or virtual currencies that do the same work as our traditional currencies. We can use one cryptocurrency to trade for other cryptocurrencies and can also exchange cryptocurrency for fiat, that is, our normal currencies that we use everyday. In a country or locality where crypto currencies are accepted, individuals can trade with cryptocurrency. For instance, and Estate developer published his/her estate on the internet, interested members can purchase with either BTC or any of the Altcoins per their agreement. Examples of Cryptocurrencies are Bitcoin, Ethereum, Litecoin, Steem etc.
The first cryptocurrency to be initiated was Bitcoin in 2008 by Satoshi Nakamoto, an anonymous individual or group of individuals who came together to mind the first block of cryptocurrencies. Due to this, Bitcoin is regarded as the mother of all cryptocurrencies and it’s ranked first in any trading platform.
Cryptocurrencies are run on the Decentralized blockchain networks such as Ethereum blockchain. This means that any transaction to execute on the network is based on p2p. With the p2p transaction method, users can initiate transaction anytime without the involvement of third parties like banks.
Like our traditional currencies which are produced by Money Making Machines, new cryptocurrencies are produced by mining them. Several consensus algorithms are used in cryptocurrency mining depending on the blockchain platform. Some uses the Proof of Work(PoW), where miners solve complex mathematical algorithm to have a chance to create new block on the blockchain. Other blockchain networks uses Proof of Stake, Proof of Brain and many other consensus algorithms in mining cryptocurrency.
Mining cryptocurrencies involve the use of complex machines which are very costly and also require high electric power. This can’t be afford by everybody and so cryptocurrencies are not mine by everybody. But with blockchain networks that uses PoB or DPoS, , users can earn new cryptocurrencies by writing quality posts which will be curated. This is possible because of the Stake-weighted mechanism.
Cryptocurrencies are stored in wallets which are managed public and private keys. This keys are generate during the creation of the wallet. The Private key show ownership of the wallet while the public key is used to validate transactions.
Features of Cryptocurrencies
Decentralization: cryptocurrencies are operate on blockchain networks which are decentralized. This means that every node on the blockchain works independently without the interference of other nodes. The whole blockchain isn’t control by a single node which gives out instructions for other nodes. Every node works independently and in malfunctioning of other nodes do not stop all nodes from operating.
Immutability: every transaction made with cryptocurrency are verified and validated, afterwards it’s been stored in blocks on the blockchain. The details of the transaction stored on each block can’t be changed or altered, this is due to cryptography technology used to secure the network. Any attempt to change the data on any block will render that particular block and the preceding blocks invalid. This shows how secure cryptocurrencies are.
Transparency: Blocks on the blockchain network are linked together by chains, so do any transaction that has been validated and stored on a block will be distributed to other blocks. Details of transaction on each block are distributed to other blocks, this means that any block can be referenced from the previous block. Every block on a blockchain can be reference from the genesis block ad the first block of the blockchain. We can still check the details of the first transaction made by Satoshi Nakamoto on the Bitcoin blockchain, this is due to the transparency of the network.
Volatility: price of Cryptocurrencies fluctuate depending on the number of traders entering the market and the number of traders exiting the market. When traders entering the market are more than that of those exiting the market, the demand for that particular cryptocurrency increase and the price as well. Also, when the number of traders exiting the market are greater than those entering the market, the demand for that cryptocurrency is less and the price too depreciates as well.
Advantages of Cryptocurrencies
The decentralized nature eliminates intermediaries like banks which reduces transaction fees.
The use of cryptography technology in securing cryptocurrencies prevents compromising of user’s asset by hackers.
All transactions carried out on the blockchain can be seen by all the users and any transaction stored on a block cannot be altered.
Transactions can be made at any point in time without the approval from third parties and countless number of transaction can be made within a period of time.
cryptocurrencies are scalable, this means that several transaction can be process simultaneously.
Transaction period only take seconds to process, unlike the traditional currencies which can sometimes take days for intercontinental transfer.
No kYC verification before making transaction with cryptocurrency, unlike the banks were users will provide their details to an extend of give their birth cert.
Disadvantages of Cryptocurrencies
cryptocurrencies are immutable, therefore any transaction made to a wrong address can not be retrieved.
When users’ loss the keys to their wallet, all the assets in the wallet are gone and can’t be retrieved.
Cryptocurrencies are not accepted in all part of the world. Many countries have put a banned on cryptocurrency exchange and so many companies and industries in that locality do not accept Cryptocurrencies as payment.
Market of Cryptocurrencies are volatile, this means that price of Cryptocurrencies fluctuate every seconds. This can bring a big loss to traders.
Though Cryptocurrencies are secured by cryptography technology, hackers still find ways of compromising users’ with little knowledge about crypto by sending spam mails that reveal users’ wallet keys. Some use double spending method.
Price of Cryptocurrencies are mostly determined by whales, as they enter the market with millions of dollars and also exiting with millions of dollars after making enough profits. A good example was when ‘Elon Marks’ name himself Dogefather, the price for DogeCoin increased from $0.346 to 0.714 within a week.
How You Would Like To See Cryptocurrency In The Future?
Ever since the initiation of Bitcoin as the first cryptocurrency in 2008, Cryptocurrencies trade have improved in the various sectors of life but due certain restrictions regarding Cryptocurrencies it still has a long way to go. Below are my expectations of Cryptocurrency in the future;
Cryptocurrency though has been used in exchange for other currencies, the aspect of Cryptocurrency being use in purchasing goods and services hasn’t been very active due to restrictions and banned from certain countries. For instance, we can’t use cryptocurrency in purchasing foodstuffs from the market as we do with traditional currencies. In a long run, it will be grateful if we can use cryptocurrency to purchase everything we desire.
Certain restrictions put on cryptocurrency should be lifted as it retards the progress of cryptocurrency. For example, few months ago China put certain restrictions on trading of Bitcoin in certain parts of the country. In the coming years I will expect cryptocurrency to overcome these challenges and very individual can trade with crypto peacefully.
The immutability feature of Cryptocurrency makes it impossible to change any validated transaction stored on the blocks. This means that any transaction made to wrong address cannot be retrieved. Certain amendments should be made to enable the reverse of transactions made to wrong or invalid addresses.
The asymmetric cryptography technology used in securing cryptocurrency prevents hackers from compromising users assets which is a grate innovation.But in situations were users’ loss the keys to their wallets, everything is gone and so blockchain technology should able to provide a mechanic in the feature where users’ will be able to retrieve their keys when loss.
Conclusion
Generally we discussed about the concept of cryptocurrency were we talked about it being a digital currencies just like traditional currencies for purchasing goods and services.
We also talked about cryptocurrency being run on blockchain networks and certain features about cryptocurrency, like it being decentralized, immutable, scalable, volatile and many others.
We also talked about the good side of Cryptocurrency were its able to eliminate banking system and provide fast and reliable transactions between users’. Also, we discussed about the part of Cryptocurrency that need to be revise in order to gain stand everywhere.
Thanks For Your Attention