Crypto Academy Week 14 , Homework task for [ @levycore].. Learn About Cryptocurrency // Homework done by @xkool24

Hello Friends, It is my usual pleasure to participate in today's Class and Homework task by Prof @levycore on "Learn About Cryptocurrency". It was well understood and I should get started in dropping my view as it affects the questions set.

1. What is the fundamental difference between Cryptocurrency and the conventional financial system?

The difference between this two is a glaring one and needed to be pointed out at every given time. The Cryptocurrency as we know are barely virtual type of currency which are not felt but retains value and performs its function as a means of legal tender though not universally accepted in some countries, whereas the conventional financial system has a physical touch in display which can be moved from place to place either by man efforts or electronically and are universally accepted as a means of tender.

Cryptocurrency does not require the activities of intermediaries or middlemen of any sort to discharge its full functions effectively void of any form of bureaucracies in handling transactions timely, whereas there are middlemen activities seen in the conventional financial system in the form of the bank where users must pass through to get any of their activities carried out as required. This in most times are time consuming, and saddled with unnecessary bureaucracies.

In the cryptocurrency world, it is purely a decentralized platform that does not require any central or commanding unit to work both efficiently and effectively, whereas in the convention financial system, the activities and functionalities of all that is required to be executed in the system passes through a central unit or centralized command.

It is also obvious to fundamentally see that cryptocurrencies are resilient to all forms of inflation; that is to say, the activities of inflation in the market does not affect its value unlike what is obtainable in the centralized platform where the inflation is a veritable tool that devalues the worth seen in the conventional financial system. In the cryptocurrency, it is know that activities of demand and supply are the only direct proportional instrument that affects its value.

In all activities seen in the cryptocurrency, it is an open source, permissionless and trustless system that only executes transaction when all criteria are met. It allows users and the public to have an allowed audit and full report of transactions done in the platform which displays high level of transparency. Whereas, this is not obtainable in the conventional transaction system where information regarding data transaction and audit reports are kept in confined status which can be altered and doctored.

Lastly, there are high cost / chargers/fees seen in the conventional financial system which is largely not available in the cryptocurrency space where transaction fees are at its 0 charge.

2. Why is a decentralized system needed?

For me, there are many reasons why the decentralized system is needed which may not be unconnected but to put some checks on the excesses and limitations seen in the centralized system platform.
Less Bureaucratic Processes: The decentralized does not need to put the user under any unnecessary bureaucratic and tiring processes seen in user documentation and KYC attainment before having access to the platform. Users coming into the decentralized platform have free and easy access to join without any rigorous entry process.

No Central Unit of Control: Also, a decentralized system does not need any centralized unit of command to regulate and gag users on how to use and transact with their assets in the platform. And issue of accounts been blocked due to any form of not following laid down policies and guidelines are not seen as the user-account total ownership is guaranteed at any time and user account maintained for lifetime.

Open source/Transparent: Every reasonable government,enterprise,firm etc. that wants to ensure transparency in all it does and reduce issues of fraud and high handiness should be able to employ the decentralized system which is geared towards an open source system. In this case all transactions made and data processed are in the open domain where all interested persons and audits can be carried out seamlessly.

Less Hack attacks: The decentralized systems are well known for its high level of asset safety. There are very low or no issues of system hacks except those done due to loss of passwords or keys from users or centralized exchanges where the assets are kept. It is a more safer platform to assure investors of their 100% of assets invested.

Scalability and Interoperability: The decentralized does not only have the ability to handle much larger volumes of transactions per seconds but also its ability to interchange information with other blockchains networks with high level of ensuring such data are not mutilated or altered before they are executed during the process. This also ensures high level of competency and trust in operating systems.

3. What affects the value of cryptocurrencies?

There are few reasons I have perceived that may affect the value of cryptocurrency:

• Demand and Supply chain seen in the market. This has been seen as an every day determinant of how well a cryptocurrency value goes. If there are more demand of a particular coin without much supplies, the value of a cryptocurrency is seen to go up and vise versa.
• Hacks and Loss of assets from wallets and exchange platforms can also lead to the drop of cryptocurrency value. These hacks may not necessarily be from the blockchain rather from third parties platforms like the exchanges.
• Sentimental news from high profile holders of the coins. An example is the Telsa Case where the statements from its Chief/CEO Ellon Musk on Bitcoin has either seen the bearish or bullish worth of the coin. When He announced to use Bitcoin as a means of exchange and purchases in Telsa, the value of Bitcoin was sen to shore up and he also denounced this move, we all saw the crash of its value too. This trend was also seen in the Dogecoin price rush where a poll was conducted by Ellon Musk for its token to also be considered.

Why can't everyone be a miner?

Mining as discussed in the class is a basic way of bringing in new cryptocurrency come into trade. These miners are seen to engage in the solving of computational puzzles with high powered computer devices, hence which in turn are rewarded and earn tokens. For those using high computational computer devices to validate transactions especially the a consensus algorithm of PoW, high energy consumption are required to solve complex mathematical puzzles. And hence, the high cost of a one-off equipment setup and routine maintenance are seen.
These are some of the highlights why everyone cannot be a miner;

• The high cost of assembling and setting up these ASICs are expensive, therefore these equipment are not affordable to the reach of everyone and the common man.
• Due to the kind of equipment seen in use, there are high energy consumption level required to power these devices. Example: Mining of Bitcoin requires a high fossils fuel ( energy consumption) to execute this task.
• Requires some level of expertise. There's difficulty becoming a miner and also earning from its reward pool given to the fact that it requires the fastest miner who is able to solve these mathematical puzzles, and this requires some level of expertise.
• High cost of system maintenance is also a draw back for anyone who intends to join the mining crew.
• Not universally accepted as a legal activity. Just like in Nigeria, all cryptocurrency related activities are not allowed, though users can continue their peer-2-peer transactions without any government related intervention.

Why can cryptocurrency transactions be called more transparent?

Cryptocurrency transactions are usually seen to be carried out in a decentralized platform which in turn works on a blockchain system. A decentralized blockchain are database archive for cryptocurrency transactions where ALL information are stored in the nodes and these nodes are made available to all connected systems to the blockchain network. Let us look at the following functionalities seen here which makes it more transparent;

• Completed Transaction data hashed in a block are stored in a blockchain
• Stored information cannot be deleted and altered/Edited
• Stored information in the blockchain are made available in all connected devices across the world
• Since it is blockchain, it is an open source that allows the activities of audits on its transaction anytime and any-day.
• Information and all transaction data are in the public domain for all interested person to view.

6. Explain how the development of cryptocurrency in your country?

Nigeria happens to be amongst the high ranking member countries indulging in the activities of cryptocurrency with so many of her youths gainfully making a living from it but unfortunately this has no governmental support in this regards. Sometimes NIN 2017 and now in 16th February 2021 the Central Bank of Nigeria (CBN) addressed the banks and other financial institution in the country that their continued dealing on all cryptocurrency related activities in the country is hitherto prohibited. This did not just go down alone, it also directed the banks to identify individuals or bodies who are responsible for this volume of transactions ongoing in the financial sector as over $500m worth of volume are seen to have transacted in the cryptocurrencies token for the period under review.

It was seen that it mentioned the lack of KYC in the blockchain industry for its woes as many uses this anonymous window to launder money and finance terrorism. This developmental stage already seen in country has been seriously dashed, but all hopes are not lost as a change in administration in years ahead would unleash better opportunities in this line.

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In conclusion, the decentralized platform is the future of the financial system despite the teething issues at this stage. With better awareness with better ways to adopt it's usefulness bearing in mind it's limitations should be well articulated and implemented.

Thank you prof @levycore , this is my entry