Club75 || Steemit Crypto Academy Contest / S2W1 - How Cryptocurrency has Shaped the Financial Realm. What is Its Future? by @anyiglobal

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Introduction

Good day everyone! Welcome to the steemit engagement challenge season 2 week 1. I believe the previous season ended successfully, and so will this season end successfully too. I'm glad to participate again in this special contest organized by the SCA community. This contest will also give every participants the opportunity to express their view on the future of Cryptocurrency.

I'm here to drop my own entry to the contest. However, before I proceed, I will like to list the topic we're to write on in this contest below:

• Users are expected to briefly give an overview of cryptocurrency.

• Draw a comparison between cryptocurrency and conventional currencies.

• Explain the distinctive innovations of cryptocurrency and its downsides.

• How do you think major problems with cryptocurrency can be handled? Let this be a response to the downsides highlighted earlier.

• Do you believe in the future of cryptocurrency? State your reasons. Any Recommendations?

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1. Users are expected to briefly give an overview of cryptocurrency.

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Crypto is gotten from cryptography. However, the word is also derived from a greek word 'Kryptos' meaning 'hidden or secret'. Currency on the other hand is a generally accepted medium of exchange for goods and services. Therefore cryptocurrency can simply be defined as a hidden currency for the exchange of goods and services.

Cryptocurrency is a digital asset that makes use of blockchain technology, a distributed ledger to enable a secure transaction on the network. Cryptocurrency uses cryptographic algorithm to enforce a secure transaction between nodes on the network. The blockchain technology works on peer-to-peer network, which makes it a more decentralized network that operates without the intervention of a central authority, thereby delegating the authorities of validating transactions to individual nodes or computers on the network.

Cryptocurrency is created to facilitate online payments to be sent directly from one network participant to another network participant without going through the financial institution like banks.

Brief overview of cryptocurrency
Contrary to popular believe, Bitcoin is not the first digital cryptocurrency. The first digital currency was created in the 1980's by David Chaum, and his project was called DigiCash. Following this, we have other projects such as e-gold, Hashcash and B-money. But none of this project succeeded, and one of the main reasons is because they were centralized, they can be hacked or shut down at any moment. And in addition, these digital cash projects were not able to solve the problem of Double-spending. Double-spending is where a person takes the same pieces of digital currencies and they can spend it in two, three or even more places.

But in October 31, 2008, following the financial recession, the pseudonymous "Satoshi Nakamoto" published a white paper or a guideline which describes how bitcoin was implemented, however it solves the double-spending problem and the was Decentralized. And till date the true identity of the person or organization behind the blockchain network is still unknown. The cryptocurrency, Bitcoin is decentralized and was launched in January 3rd, 2009. And Bitcoin started with the genesis block with the first bitcoin block that was added to the Blockchain. Users of cryptocurrency are people looking for privacy, people looking for a form of money outside the government control. And in the beginning there was no exchanges, there was no buying, there was no selling. The way people got bitcoin was by using the regular desktop computers, regular CPUs to mine the bitcoin.

The first cryptocurrency (bitcoin) commercial transaction occurred on May 22, 2010 for a tangible asset, when a man named Laszlo Hanyecz bought two pizzas for 10,000 Bitcoins. And this event is known as Pizza Day. And without this important transaction, bitcoin may not have ever even reach $1. You could make the case that this was the transaction that really changed Bitcoin, and really made it a legitimate currency. And in July 2010, Bitcoin started trading firstly with the price range of $0.0008 to $0.08 at that particular time.

We have various types of emergent Cryptocurrency companies who have built their own project under the conceptual basis of Bitcoin. Some popular types of cryptocurrencies include; Eth, BNB, XRP, Dogecoin, e.t.c.

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2. Draw a comparison between cryptocurrency and conventional currencies..

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My comparison between cryptocurrency and conventional currencies will based on their similarities and their differencies. These I will outline in a tabular form as given below.

Similarities

• They both serve as a medium for exchange of goods and services
• Both are generally accepted legally
• Both exist in varieties. For example cryptocurrency has it's own variants such as BTC, ETH, BNC, XRP, FTM, DOGE, e.t.c. and conventional currencies has it's own variants such as USD, NGN, EURO, POUNDS, YEN, e.t.c.
• Both can be used as payment and act as a store of value
• Both rely on widespread consumer trust in order to function as a means of exchange

Having looked at some predominant similarities between cryptocurrency and conventional currency, let's now look at their differences.

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Differences between Cryptocurrency and Conventional Currency

Cryptocurrency	Conventional Currency
Cryptocurrency is decentralized which means participants on the network can directly send and receive transactions and it is not regulated by any central authority.	Conventional currency is regulated by central authority such as the central bank. They monitor and control all the transactions done with the conventional currency
Cryptocurrency such as Bitcoin uses the process of mining to produce and distribute bitcoins	Conventional currency is issued by the central authority
Cryptocurrency transactions cannot be reversed or cancelled meaning that the blockchain is append-once or immutable	Conventional currency transactions can be reserved or cancelled following a due process by the financial institution
The trust vested in cryptocurrencies is founded on the fundamental technology called blockchain technology	The trust vested in conventional currency is ensured through the money supply issued by a central authority.
Cryptocurrency offers privacy to it's users because the transactions is only known between the sender and the receiver, no third party is involved	Offers no privacy to it's users because the transaction has to go through the central authority to authorize and record transactions.
Uses electronic wallet to store assets	In terms of bank, they uses vault to store assets or currencies.
They cannot be carried around physically, meaning they are only feasible on a digital computer.	They can be carried around physically meaning they are portable
They are volatile, meaning they rises and falls within minutes	They are not volatile
Cryptocurrencies like bitcoin has a fixed supply of 21,000,000 units, making it even more scarce than gold.	Conventional currencies are subject to inflation and central banks can print more currencies at any given time.
Not prone to counterfeiting.	Prone to counterfeiting.

Listed above are my similarities and differencies between cryptocurrencies and conventional currencies. Hope you deemed very well to grab one or two from the information passed.

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3. Explain the distinctive innovations of cryptocurrency and its downsides.

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To my own view, the distinctive innovations of cryptocurrency includes the following:

• Blockchain technology

• Decentralization

• Cryptography

• Blockchain Technology: Blockchain is the collection of records, linked with each other, strongly resistant to alteration and protected using cryptography. Blockchain works on peer-to-peer network. Every node on the network are connected point to point to each other making it a decentralized network. All the transaction details of every user are recorded in the block and they are connected to each other using a hash function. This innovation is what solves the problem of easy hacking by hackers and helps the cryptocurrency to enable a secure transaction. This helps a fast transaction on the network.

• Cryptography: Transactions sent through the network is strongly protected using complex encryption algorithm. This innovation is what makes cryptocurrency more secured than conventional currency. Cryptography makes use of two keys, the public key and the private key. The public key as the name implies is made public in the network and everybody on the network can see this key. It is used for encryption. The private key as the name also implies is only private to the owner. Only the owner has access to this key and it is used for decryption. Well, this is like the backbone of cryptocurrency because everything is hidden. The digital assets are protected by cryptography.

• Decentralization: This innovation is what solves the problem of centralization. There's no third party intervention in the transaction that occurs between participants on the network. The nodes on the network are directly connected to each other. This feature facilitates privacy and anonymity on the network. The identity of people performing the transactions are being hidden from a third party. This feature grants a permissionless access to cryptocurrency on the network.

Downside of Cryptocurrency
To me, the main downside of cryptocurrency is the fact that once a transaction has occurred, it cannot be reversed or cancelled. And this comes from the fact that the blockchain is designed to be append-once or immutable meaning that once a transaction is recorded on the blockchain, it cannot be changed again. This makes it very costly to make mistakes during transactions on the network.

As we all know that errors are inevitable, immutability proofs to be a great downside of cryptocurrency. This cryptocurrency also enables a fast transaction making it very difficult to cancel transaction once a significant error is made.

Another downside of cryptocurrency that I will like to say is anonymity. The identities of the person-to-person transactions are not known, which means they're hidden. This gives room to scam by scammers because once a user has been scammed off his digital asset during transaction, the identity of the scammer will be difficult to trace. This downside can have good and bad side at the same time.

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4. How do you think major problems with cryptocurrency can be handled? Let this be a response to the downsides highlighted earlier.

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Well, to me, the major downsides of cryptocurrency discussed above can be handled if some majors are taken into consideration. I think the system should be redesigned so that the transaction time should be increased to maximum let's say 2 minutes so that the sender can reverse or cancel transactions should incase errors occurs.

Though this is one of the main conceptual basis of cryptocurrency, it can still be redesigned to solve this problem. However, if this transaction time can be increased, I believe the loss of funds due to unnecessary mistakes will be reduced.

Anonymity downside can also be improved by redesigning the system such that the identity of the sender is known to only the receiver of the transaction. I know this can seem difficult, but I know nothing is impossible in the world of blockchain technology.

Solving the problems that relates to cryptocurrency will make it more efficient and reliable against conventional currency. These problems may seem difficult to solve though because the concept has been there since the introduction of cryptocurrency.

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5. Do you believe in the future of cryptocurrency? State your reasons. Any Recommendations?

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Lol... who wouldn't believe in the future of cryptocurrency. Yes of course I strongly believe in the future of cryptocurrency.

Reasons
Since cryptocurrencies act as a store of value like other commodities such as gold, silver, platinum and co., and for the fact that technology is evolving towards blockchain technology, the prospective of cryptocurrency will always remain rigid to me. The time I will stop believing in cryptocurrency is when digital computers are gone. But as far as digital computers where these cryptocurrencies operates still exists, I will continue believing in the future of cryptocurrency.

The technological advancement has given cryptocurrency an edge-growth in the financial realm because everything is kept digital. The cryptographic security method used in protecting transactions and the network from being hacked also gives the cryptocurrency an edge-growth in the financial realm.

The decentralization of the network on which cryptocurrency operates on is also another reason why I believe in the future of cryptocurrency. No intervention of the central bank to regulate how transactions will be done on the network. Anyone can do what he wants to do with his funds without taking permission from the central bank, thus making it a permissionless-accessible currency.

Recommendations
I recommend cryptocurrency to anyone who wants to enjoy a full privacy of his identity during transactions. I also recommend this cryptocurrency to anyone who do not want his or her fund to be controlled by a central authority like the central banks.
It is also recommended to anyone who needs a strong a security over their funds.
And anybody that wants a fast transaction is recommended to use cryptocurrency.

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Conclusion

Cryptocurrency has really shaped the financial domain in the world of technology. Though it is not advisable to tell somebody to start using cryptocurrency as it is not a good financial advice because the said cryptocurrency is highly volatile and can make you loose all your funds in minutes. That's why it is advisable to ask them to do their own research before investing in any cryptocurrency they deem profitable.

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Thanks for engaging in this post! Am glad having you as friend on this great platform. Remain blessed and Stay Safe anywhere you are!

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I am @anyiglobal, a Computer Scientist, Software Engineer and a Blogger!

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