Hello everyone. First i would like to thanks @levycore for your great lecture. in this week the professor talked about Learn About Cryptocurrency.
1. What is the fundamental difference between Cryptocurrency and the conventional financial system?
The main distinction between cryptocurrencies and the financial system is that cryptocurrencies are built on two centralized systems: they are decentralized currencies supervised by institutions that regulate their value and set rules for their use, similar to the conventional or traditional financial system. The use of conventional currency is strictly controlled by the government. Bitcoins and fiat currencies all have monetary values that can be used to purchase and sell commodities in the economy.
There is a risk of currency freezing since conventional currency is only operational five days a week and is subject to transaction restrictions. Since there is no cap on the amount of currencies that can be printed, when there is insufficient money. However, In a Cryptocurrency scheme, there is no inflation.
When using a standard currency scheme, users must have personal information such as their name, address, phone number, and more. This is because the malicious user would be able to quickly hack the standard currency system's account data. on the other hand, in Cryptocurrency blockchain, which is a massive public ledger, records any transaction as blocks. A transaction will be stored in blocks, which will have transaction history, transaction length, and the previous block's hash code.
Making a national transaction in a conventional banking system would take 2-3 working days, and transaction fees will be heavy. The processing fee for overseas transfers will be even higher, and the transaction will take 15 days to complete. Meanwhile, there is no processing charge for making a national transaction through a cryptocurrency scheme including bitcoins. There are minimal fee for international transaction .
2. Why is a decentralized system needed?
For a variety of reasons, a decentralized system is needed.
- Data keep safe and transfer speed are very fast. The chance are scalability very low.
- Decentralized networks are well-known for their high asset protection. Decentralized System provide high security. So it is impossible to hack.
- There are no third party need to access so the transfer are transparency
- There is no need for a centralized command and control structure in a decentralized system. User can control and access their fund.
- Reliability is high and There is no possibility of data failure.
3. What affects the value of cryptocurrencies?
There are a few factors that I believe can influence the valuation of cryptocurrency.
- In the industry, demand and supply chains can be seen. This has been seen as a day-to-day determinant of a cryptocurrency's worth. When there is a lot of demand for a given coin but not enough supply, the value of that coin rises, and vice versa.
- Cryptocurrencies that are traded on a regular basis by crypto traders become more volatile over time. The price of those coins rises as a result of this. The price of a coin would be less valuable in the crypto industry if there is no constant trade.
- Cryptocurrency valuation may also be affected by hacks and the loss of funds from wallets and trading sites. This hackers may come from third-party sites such as exchanges, rather than the blockchain.
4. Why can't everyone be a miner?
There are some reasons why not everyone be a miner. However, i will explain four reason in this homework.
- Due to existing principles, most people are unable to invest in cryptocurrencies. However, the same can be said about the hardware and computing power used to mine cryptocurrencies like Bitcoin.
- Second reason is Values are Volatile. It's undeniable that the importance of bitcoin has risen over the last nine years. Despite this, their ideals are far from stable. One of the reasons you shouldn't pursue cryptocurrency mining is the unpredictability of the values. After investing in mining machines, time, and energy, it appears that buying one is a better deal.
- There is just too much risk due to the high cost of cryptocurrency mining. You could spend all of your time and resources on mining and yet come up empty-handed.
- To spread out prices, some people have taken to mining pools. Mining pools are made up of many individuals who share the equipment and costs of mining. The problem with this strategy is that it distributes any gains in such a way that each individual receives less.
5. Why can cryptocurrency transactions be called more transparent?
Cryptocurrency trades are typically carried out on a shared database that is based on the blockchain framework. A cryptocurrency transaction is typically fast, safe, and simple to complete for the user's convenience. The following functionalities are required to complete a transaction.
- A blockchain stores completed transaction data hashed in blocks.
- These are the address of receipt, or of exchange or return, of a transfer.
- All wired computers around the world have access to the information stored in the blockchain.
- Both transaction records and information are in the public domain and can be used by anybody who is interested.
- Through logging in the blockchain, everyone can see cryptocurrency transfers. Everything is saved, with a number and the form of currency transferred.
This is because cryptocurrency transactions be called more transparent.
6. Explain how the development of cryptocurrency in your country?
In 2017, Bangladesh's Central Bank issued a warning that cryptocurrencies are illegal in the country. The notification says, according to a news article, that transactions with this currency can result in a breach of established money laundering financing regulations. Bitcoin transactions, according to the note, "are not approved by the Bangladesh Bank or other regulatory authorities, and do not comply with the requirements of the Foreign Exchange Regulation."
At the moment, the only currency that can be used to buy and sell in my country is the Taka.
Conclusion
Despite the current teething problems, the open network is the financial system's potential. Its utility should be well expressed and applied with better understanding and best approaches to adopt it's usefulness while keeping in mind its weaknesses.
Thanks everyone. Especially Thanks to professor @levycore for your lecture.
Regards
@bluesdl