Steemit Crypto Academy Week 14 - Homework Post for [@levycore]
Hello everyone Assalamu Alaikum.
Hopefully, all of you will be happy and enjoying your best days with the blessings and grace of Almighty Allah. Welcome to this post which is actually the homework post of week 14 of Steemit Crypto Academy for the dear professor @levycore. I have read the whole of the lecture post and now I am going to discuss the questions that the professor asked as an assignment for this week.
So, today our topic of discussion is the Cryptocurrencies
Introduction of Cryptocurrency
As we all are well awared about the progress and the development of digital world. All of the basic needs of men are developing into the digital an virtual world. So, the same is the case with the currencies. The fiat currencies simply named as the traditional currencies like Dollars, Ponds, Euros and Rupees are now been coverted and actually developed into the digital and virtual currencies known as the Cryptocurrencies or the Digital Currency. In the traditional finance system of the world, there were the pieces of paper or the coins of some metal which are of different worths but in this modern and digital era all of these things have been converted into the digital assets like Bitcoin, Ethreum, Dogecoin, Binance Coin, etc.
There are some questions asked by our professor as an assignment for this week. So let's start the questions in a specific order.
(01)
What is the fundamental difference between Cryptocurrency and the conventional financial system?
As Conventional Finance syatem and the cryptocurrencies are both exactly different this so know we will discuss some of the differences between these both terms .
| Conventional Finance Syatem | Cryptocurrencies |
|---|---|
| => This is the traditional finance system than the cryptocurrencies. | => This is the newly developing and more preferrable finance system. |
| => This system is centralized means to say that there is a central authority in this system. | => This is the decentralized finance system and there is no any central authority in this type of finance system. |
| => In this system, the funds and the transactions are under the control and eye of the central authority or the central controlling system like banks, government, semi-government etc. | => In cryptocurrencies, the funda and the transactions are not under the control of the any central authority but the users have complete control and free hand over their transactions and funds. |
| => The complete transaction details and the informations of the traders (seller or buyers) are stored and central authority have access to these sensitive informations. | => No on is able to trace the transactions made by different users. No one has the record of the informations or details of the transactions. |
| => In this system, making transaction is a little complex and time consuming process. | => The transactions of the cryptos is more easier and simpler as well as less time taking then the fiat ones. |
| => Transactions need a complete complicated process as there is a lot of time taking process of verifying of transactions. | => The transactions are just a little click away from the users and it is less time consuming process. |
| => There are proper sites and centres for the transactions of the funds. | => Users can make the transactions everywhere and anytime. |
| => There are some chances of the refund of the transactions if someone accidently make wrong transactions. | => There are no any chance for the sender to refund his transaction in the case of any accident or mistake. |
So these are some basic differences between the Conventional Finance Syatem and the Cryptocurrencies.
(02)
Why is a decentralized system needed?
As we have discussed above that the cryptocurrencies are decentralized maeans that there is no any central authority which controls and trace the transactions while on the other hand in the fiat currency, there the centers that control the funds in the system. So, the decentralized system is needed in the cryptocurrencies due to the following reasons:
As the cryptocurrencies are used in the blockchains for making transactions so there is a great and severe need of the security. As all of us known that, there is no any subsitute of the decentralized finance system in the aspect of the security. The cryptocurrencies are so valueable and worthy so the superior security of the decentralized systems encourages the flow of cryptocurrencies.
Decentralized finance systems do not need much time for making transactions as that of the conventional finance systems so this is another reason due to which decentralized systems are more needed in the cryptocurrencies. The users are able to make the transactions everywhere in the world and whenever they want without any wastage of the precious time.
In the decentralized systems there is no any restriction or the difficulty for the users to make the transactions of the cryptocurrencies to over the whole globe. The transactions are just a click away from the sender and the recievers.
In the decentralized systems, the transactions and the funds are peer-to-peer as only the sender and the reciever are involved in the transactions. There is no any central authority which is controlling the transactions and funds.
The users of the decentralized systems are free hand to utilize there assets and they have a complete control over their digital currencies. One is able to make the transaction whenever he want. There is no need of taking permission from any of the central person or the third party for making transactions.
Due to the above mentioned reasons, the decentralized finance system is more encouraged by the cryptos and that's why the decentalized system is the basic need of the cryptos.
(03)
What affects the value of cryptocurrencies?
As we have briefly discussed the cryptocurrencies in the above segments so know I am going to discuss the factors affecting the values and the rates of the cryptocurrencies.
The first and the most important factor that affect the value of the cryptocurrency is the popularity and the name of the currency. As we all people know that the Bitcoin is the very first and successful cryptocurrency which is proved to be very significant and valueable in the last few years. The value of the Bitcoin has been increased gradually in the past few years which is really a great achievemnt of Bitcoin.
Another factor that affects the rate or the value of the cryptocurrencies is the encouragement or the spectulations of the respective cryptocurrency. If any of the popular and well-known celebraity represented good ideas about any of the cryptocurrency this thing will affect the value of the respective cryptocurrency positively.
Another most important aspect which affect the value of cryptocurrencies is the allowence of the respective cryptocurrency in different geographic areas. If any of the crypto is restricted in a specific region than this will affect its value negatively.
One of the most important factor which affect the value of the cryptocurrencies is the interest or the attraction of the well-developed companies. If a company say PayPal shows some interest in the cryptocurrency than the value of the respective cryptocurrency will be increase.
As we know that now a days the panademic situation of COVID-19 has also increased the value of the cryptocurrencies and in the developed countries most of the public utilize the cryptocurrencies for their daily like activities such as shopping, purchasing, investing and other all activities. This thing has also incresed the rate of the cryptocurrencies.
Another factor which affect the rates and values of cryptocurrencies is the behaviour and the likings of the huge stake holders. Whenever the huge stake holders release their cryptocurrencies in the market then the rates and values of the cryptocurrencies are also affected.
One of the most important factor affecting the rate of cryptocurrencies is the inflation or the market demand of the respective crypto. If the demand of any of the crypto increses than the supply, the value of the cryptocurrency increases and vice versa.
So, these are some important factors that affect the values of the cryptocurrencies.There are thousands of other factors but these are the fundamental and basic ones.
(04)
Why can't everyone be a miner?
As we have discussed the cryptocurrencies and the factors affecting the rate of cryptocurrencies in the above sections. Now, I am going to discuss the mining of the crypto currencies.
As all of us are well awared about the fact that the cryptocurrencies are the digital assets that flow in a blockchain that work on the principles of different consensus algorithms. The commonly used consensus algorithms are Proof of Stake, Proof of Work, Proof of Burn. The blockchains are developed by the collection of different blocks which are created by the block creators simply known as the miners in the blockchain.
There are some requirements that are compulsory for the miners to mine the cryptocurrency in the blockchain by developing the blocks. Different consensus algorithms have different requirements for the mining of the cryptocurrencies. As everyone is not able to fulfil all of the requirements so every could not be able to mine the cryptocurrencies.
Mining is a process in which the new digital assets or the cryptocurrencies are mined. There are powerful and highly developed computers and operating devices that mine the cryptocurrencies. As all of these operating devices are very costly and are not affordable for everyone so this things discourages the people having low investment and having low resources.
In the case of the blockchains working on the Delegated Proof of Stake algorithm there is lack of chances and opprrtunities for the miners to get into the witness pool. This thing also limits the miners in a specific blockchain.
Another thing which limits the munber of miners is the restriction or the ban on mining in different areas of the world. There are many countries that does not allow the miners to mine the cryptocurrencies as these countries considered it to be illegal.
So these are some aspects that prove that no everyone could be a miner. As everyone could not fulfil all these requirements and needs so everyone is not able to be a miner of the cryptocurrencies.
(05)
Why can cryptocurrency transactions be called more transparent?
The cryptocurrencies are the digital assets that flow in the blockchains. As the blockchains are decentralized finance systems and in the decentralized finanace systems, all the transactions that are made by someone else are recorded and everyone in the decentralized system is able to see the transaction.
The information of the sender and the reciever and the details of the transactions are not open to everyone but everyone is able to see that the transaction is made by someone in the blockchain.
This thing is called the transaparency of the cryptocurrencies. For example, If a person send 1 BTC to his friend. The miners verify the transactions and proceed these transactions. These transactions are visible to all the normal users of the decentralized blockchain.
So, that's why, the transparency is the need of the cryptocurrencies.
(06)
Development of cryptocurrency in Pakistan
I live in Pakistan which is a developing country in the Asia. However, the cryptocurrency is not officially regulated and developed by our country but the cryptocurrency is also no banned and restricted in our country.
However, the cryptocurrencies are getting popularity in our country day by day and it is clearly seemed that the future of the cryptocurrencies is looking bright in our country. Bitcoin was first time introduced in Pakistan in 2015 and the first cryptocurrency of Pakistan is Pakcoin.
I am very sad to say that the cryptocurrencies were banned in Pakistan in the year 2018. But the public of Pakistan is very much excited to utilize the cryptocurrencies. Now a days, the cryptocurrencies are again getting popularity in Pakistan and a crypto expert named as Waqar Zaka is working on cryptocurrencies. Whole of the credits go to this person and I hope that soon the government of Pakistan will officially regulate the cryptocurrencies.
That's all about the situation and the circumstances in Pakistan in order of the cryptocurrencies.
Conclusions
Cryptocurrencies are the digital assets that are used and work in the place of fiat currencies in the digital world. The cryptocurrencies are decentralized and the transactions made in the cryptocurrencies are transaparent and visible to all the users of the blockchains. Cryptocurrencies are legal and are being developing in some countries but on the other hand cryptocurrencies are also illegal and banned in some countries like Pakistan.
So, that's all about today's task of this week. Hopefully, all of you will like my this post.
Special thanks to dear professor and instructor @levycore for such an amazing lecture and mentioning here to review out my this post ASAP.
Credits: @steemlover63
Hi @steemlover63 (, Thanks for submitting your homework
Feedback: You have completed every point and you have understood the basics of cryptocurrency
Rating: 9