STEEM CRYPTO ACADEMY WEEK 14 - HOMEWORK POST FOR @LEVYCORE - LEARN ABOUT CRYPTOCURRENCY

Thank you so much professor @levycore for the lesson. It was quite helpful and easy to understand. Below is my homework post. Please join me!

INTRODUCTION

Cryptocurrency is a digital currency or assets that can be used for virtual transactions, or traded without a third-party interference. It is used for peer-to-peer payments that take place on a blockchain. There are thousands of coins as listed on coinmarketcap. Some of the popular ones are; Bitcoin, Ethereum, Tron, Ripple, Cake, Steem, etc. Recently, Cryptocurrency investment has become a global trend and most people are familiar with cryptocurrency trading.

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1. The fundamental difference between cryptocurrency and conventional financial systems

The decentralized nature of cryptocurrency makes it stand out from conventional financial system. For the conventional financial system, transactions are carried out with the help of a third-party or intermediary, say the bank. But the cryptocurrency transaction is based on peer-to-peer model.

Also, a conventional financial system uses notes and coins which can be felt or touched but cryptocurrency is a digital currency that exists in the digital world and performs the function of a normal currency, that is, used for payment and transactions.

Hence, the fundamental difference between cryptocurrency and conventional financial system is that the conventional system is centralised while the other (cryptocurrency) is decentralized.

2. WHY DECENTRALIZED SYSTEM IS NEEDED

Decentralized system is needed for control and security. In this system, there is no third party involved whereas transactions are done on a peer-to-peer basis, that is, direct from the sender to the receiver. These transactions do not have a particular day or time for it to be executed. Since control lies with no central authority. A decentralized system is considered to be more secured and safe.

3. THINGS THAT AFFECT THE VALUE OF CRYPTOCURRENCIES

The value of cryptocurrency is affected by;

1. The supply and demand of the currency: If the supply of a coin is limited and the demand is higher the price of such coin will rise. At the same time if the supply is excessive over demand, the value will decline.
2. The price of cryptocurrency is also affected by the cost associated with mining (production cost).
3. The exchange the coin is being traded also have a part to play in the determination of a cryptocurrency's value.
4. The cryptocurrencies in that circle that competes with the coin the safety level of such coin etc.

4. WHY EVERYBODY CANNOT BE IN CRYPTOCURRENCY MINER

Mining is difficult. Everybody cannot just be a Miner. Mining involves solving difficult or complex mathematical calculations in order to introduce a new block to the blockchain. In mining a special specification of computer is needed and a miner must possess some special skills. Not everyone can jump on a system and start the computation. It is complex and somehow difficult that is why some companies stand out specifically to perform only that purpose.

5. WHY CRYPTOCURRENCY TRANSACTIONS ARE SAID TO BE MORE TRANSPARENT

Cryptocurrency transactions are said to be more transparent because all the transactions are recorded and run on the blockchain system. Everybody can monitor these transactions as they are being made available to all the computers (nodes) which are operated by miners.

Also the transparency of such transactions are also as a result of no third-party participation.

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6. THE DEVELOPMENT OF CRYPTOCURRENCY IN NIGERIA

Cryptocurrency in Nigeria have grown more than it was expected. Every passing day, new wallets are being added to the system. Most especially for the youths, a reasonable number of people either own a wallet or open an account with an exchange or hold a coin or two. All these contribute positively to the growth of cryptocurrency in Nigeria.

The only down part is that cryptocurrency is not yet accepted legally for transactions (ie purchase of goods and services), and the Central Bank of Nigeria which is the Apex regulator of Banks has ordered that no Bank should be involved in crypto transactions. However there is hope that in no time, Cryptocurrency will become a legal tender in the country.

CONCLUSION

Cryptocurrency is a digital currency that is being used for digital transactions. Recently it has become a trend that almost everybody has heard about. Cryptocurrency transactions are transparent and its decentralized system is being preferred. Some of the popular cryptocurrencies are; Bitcoin, Ethereum, Tron, Ripple, etc. In summary, cryptocurrency trading is simply straight forward and profitable. But the best protection is knowledge. One has to fully understand how it works in order to enjoy the benefits associated with the virtual currency.

Thank you so much for your time. I really appreciate!