SteemitCryptoAcademy Season 2: Week 6 Homework (by @levycore) | Learn About Cryptocurrency

Hello dear Crypto Academy Community,

I would like to thank Professor @levycore for this assignment that allowed me to take a detailed look at the topic of crypto markets. Thanks to this assignment, I read many articles and news. I have a better understanding of the difference between crypto markets and traditional financial markets. When my friends or relatives ask, I will now be able to give more descriptive answers. Also, for the first time, I answered a question about the Turkish crypto market. I hope people do not think of cryptocurrencies to make money. It is more critical for me to learn and follow blockchain technology.

Introduction
Money; has taken different forms from past to now, such as exchange systems, physical objects, paper bills, banknotes, digital money, and currently decentralized cryptocurrencies such as Bitcoin. Coins or paper money was used as a medium of exchange when they first appeared. The money, which is connected to a single-center, is used in more expansive areas today. Money, which has become an economic policy tool, is an essential part of conventional finance. One of the primary duties of the Central Banks is to ensure stability in these financial markets.
Decentralized cryptocurrencies, which emerged as an alternative to traditional currencies, have become very popular in recent years. In this market, which started with Bitcoin first, there are now nearly thousands of crypto money. Cryptocurrencies are developing using blockchain technology used as an investment tool.

1. What is the fundamental difference between Cryptocurrency and the conventional financial system?
The main difference between Cryptocurrency and the conventional financial system is their control mechanism. Central banks share their ledgers with financial institutions. This means that each transaction must go through the central banking system, where it is recorded and verified. However, decentral cryptocurrency markets remove this situation. Cryptocurrency technology does not have a central authority.
The centralized nature of the banking system makes them more susceptible to piracy. Also, the government can produce an unlimited supply of traditional money; otherwise, each Cryptocurrency has a limited supply. We can count many differences between the two markets, but the essential difference is their central and decentralized structure.

Source: Coinmetro, https://coinmetro.com/blog/digital-currency-vs-cryptocurrency-whats-the-difference/

2. Why is a decentralized system needed?
Coins or paper money have been used for centuries. One of the essential instruments of the financial system is the Dollar and Euro. Will these coins, which are tied to a single-center, be replaced by a decentralized currency? Why did people need a decentral structure? We can increase questions like this. The answer is hidden in the word "decentral". When we list a few features of crypto coins, we can learn why people want to have this structure.
Firstly, Cryptocurrencies use Blockchain and a decentralized ledger. This means that no single person or supervisory authority can control the actions on the network. Secondly, since crypto coins are decentralized, they are not hacked by hackers. Most cryptos also work during holidays and weekends. In addition, cryptocurrency trading has significant power in increasing consumers' financial awareness. In sum, Cryptocurrency is considered secure, reliable, and trustworthy. People want to involve themselves in the solution of a problem in their economy. They want a system in which they are included, regardless of the decision of a center.

3. What affects the value of cryptocurrencies?
Cryptocurrencies are developing day by day. Both the number of cryptocurrencies and the number of users are increasing. We watch or hear news about cryptocurrencies almost every day. Countries make many statements, either positive or negative. These developments in the crypto market naturally affect the value of cryptocurrencies. Since it is not connected to a single-center, the volatility in prices is faster. Three factors stand out in the change in the value of cryptocurrencies. These;
Regulatory changes; As new regulations are implemented, prices tend to react quickly; when Japan announced that it was legalizing bitcoin in April 2017, its price rose nearly 3% in a day.
Current affairs; recent announcements such as the presidential election result and rumblings of a potential Covid-19 vaccine have positively affected both crypto and fiat currencies.
New currencies; As one currency becomes popular, money flows into it from other currencies, affecting their price.

4. Why can't everyone be a miner?

Like a central bank monetizes money, the money supply for cryptocurrencies is done through mining. Miners confirm block transactions and save them on the Blockchain. All of this requires significant computer power, knowledge, and time. So why are miners doing this? Because they are rewarded. A second question arises here. Why can not everyone be a miner? We can list four main reasons for this.
- Not Everyone Have Mining Knowledge
A miner first needs to understand the technologies and processes. Cryptocurrency mining is a process that involves using computers to solve complex functions and save data on a blockchain.
- The Cost Of Crypto Mining is High
Crypto money mining today requires many resources in terms of computing power, technology, and electricity. It consumes a lot of energy and has a risk depending on the life of the machines.
- Many New People Join
More and more people are getting involved as time goes on, reducing the return on investment.
- Importance of Geographical Location
Cryptocurrency mining is prohibited in some countries.

5. Why can cryptocurrency transactions be called more transparent?
According to Wikipedia, “Transparency, as used in science, engineering, business, the humanities and in other social contexts, is operating in such a way that it is easy for others to see what actions are performed. Transparency implies openness, communication, and accountability.” Everyone wants transparent management or market. However, it is impossible to see this in central markets like the Dollar or Euro. Significant structures are located in a specific country or a group of companies.

Source: Finance Digest, https://www.financedigest.com/why-does-the-cryptocurrency-market-struggle-with-transparency.html

What makes cryptocurrencies transparent? We can explain this question with essential points. Firstly cryptocurrencies are global; this means that the whole society can use them. Secondly, they are controlled by me, you, and all of us. With this, we can become part of the market directly. Cryptocurrencies have borderless. For that reason, many companies and citizens use cryptocurrency markets to lend money with crypto, try new technologies, and control their own money.
In sum, most cryptocurrencies are transparent. Since all revenue streams are placed on a blockchain, anyone and everyone can see all transactions made and received by any user.

6. Explain how the development of Cryptocurrency in your country?
The main reason for using crypto money in Turkey is to generate income. However, companies want to increase their advertising and promotion with this technology. In addition, both individuals and companies want to keep up with blockchain technology. There are many crypto exchanges in Turkey, but 2 of them stand out. These are Paribu and BtcTurk. I have been using Paribu for three years. I am happy with this stock exchange, as I have made small investments.

Figure 1. Crypto Exchange in Turkey: Paribu and BtcTurk

Cryptocurrency has brought new developments in technology and finance. In this context, both people and companies have become interested in cryptocurrencies. The population of Turkey is more than 80 million, and most of it is young people. Young people are doing technology-related jobs today. That's why they are no strangers to the crypto world, either. Especially in recent years, millions of people in Turkey have started to be interested in this field. When we look at the world rankings, Turkey ranks fourth with 16%.
However, the most critical problem in Turkey is the wrong investments made to get rich fast. Many people lost after investing massive amounts. Some sold their houses, and some took loans from the bank. Also, a crypto exchange in Turkey defrauded people. Many people lost their money because of this exchange. You can find more detail here: https://www.bloomberg.com/news/articles/2021-04-26/losses-arrests-and-a-manhunt-cryptomania-hits-home-in-turkey

Figure 2. List of Countries Cryptocurrency Share (2020)

Source: Statista Global Consumer Survey,
https://www.statista.com/chart/18345/crypto-currency-adoption/

Cryptocurrencies are not used very often in companies in Turkey. In Turkey, crypto money is mainly used by companies in the IT sector. The biggest problem for businesses in Turkey is the volatility in exchange rates. Especially companies that cannot export are badly affected by these volatilities. The absence of this problem in cryptocurrencies is an advantage for these businesses. That's why many companies will be trading with cryptocurrencies in the future.
Legal regulations regarding cryptocurrencies have been on the agenda recently in Turkey. The government is looking closely at this market to develop legislation. It is stated that it will start to establish a tax regime in particular. Turkey sees cryptocurrencies as a risk because it does not regulate. Research shows that between 16 and 20 percent of Turkish citizens use or own Cryptocurrency by 2020. Especially after the recent event, Turkey will bring regulation to the crypto market soon.

Conclusion
I do not expect cryptocurrencies to replace the dollar or the euro. However, I think cryptocurrencies have made a big revolution. Since the Bretton Woods agreement in 1944, the dollar has been operating as the essential instrument of the financial markets. The USA has become a superpower thanks to its currency. However, the money established by individuals or companies is currently getting more robust against the dollar.
The codes of traditional finance are now changing. Although many countries or central banks oppose it, they cannot prevent the rise of cryptocurrencies. People are now a part of this technological development. In summary, both the conventional financial system and Cryptocurrency have their strengths and weaknesses. However, since cryptocurrencies are more secure and transparent, they can repair their weaknesses.

CC:
@levycore