Good day steemians, hope you had a wonderful day, for me I will say yes because I just read through the lecture of professor @levycore on Learn About Cryptocurrency.
It's time for my homework.
- What is the fundamental difference between Cryptocurrency and the conventional financial system?
I will say that the fundamental difference would be that cryptocurrency is decentralized and I will also say that it is a global digital currency, which is outside the control of the conventional financial system (banks) and is not upheld by a central government. So cryptocurrency is very immune to the ancient ways of government controlling and interfering.
Apart from the above-mentioned conventional financial system currency and cryptocurrency are called money or currency. And they are mediums of exchange that we use to store and transfer. Cryptocurrency, as well as conventional financial system currency, can be used to buy goods and also to pay for services.
Other differences are that for a conventional financial system the government can produce as many as needed (unlimited), but cryptocurrency is limited because it has a set maximum to produce.
The conventional financial system is centralized so it is controlled by the law and government, while cryptocurrency is decentralized and not controlled by the government or any central power.
2 Why is a decentralized system needed?
I will say a decentralized system means there is no central authority to control a system, but the control is divided among the participants in the system. So a decentralization system avoids the abuse of power from one central authority. So it makes cryptocurrencies easily to use because decentralization allows for all of the other benefits of the marketplace, such as no fixed fees to use any platform, there is no central authority collecting all our data, users are in total control of their trade, and there is no central authority forcing a user to follow His/her own terms and conditions.
I will say it is needed because of hackers, which can easily occur in a centralized system
3 What affects the value of cryptocurrencies?
I believe one of the reasons Cost of extraction (mining)
Cryptocurrencies like Bitcoin come from nowhere. So cryptocurrency miners extract cryptos (mining) using one special equipment called excavators. And this process becomes more difficult each day. So when the cost to extract virtual currencies start increasing, it will affect the price itself of cryptocurrency.
A second reason which I can think rules and regulations
Some different rules or requirements are introduced by national authorities. While sometimes they are positive, and other times not necessarily. When the rules start to become restrictive or take the form of control, the price of the cryptocurrency might fall. But if they become friendly to the cryptocurrency industry, it will act as a spur for strength increases.
The third reason I think is the supply and demand
I feel this one is the major factor influencing the crypto price. The higher the demand or price and the lower the supply or vice versa. When the demand is very low and supply is high, we will see that the value of the crypto will decrease.
Unlike conventional financial system currencies, the supply of cryptocurrencies is limited as I mentioned earlier. Then it starts to progressively slow down. Because of this reason, the demand for assets will exceed the available amount.
But the demand for different cryptocurrencies may vary considerably. And this can influence other, specific factors.
The fourth reason that I feel can affect is financial crises
Cryptocurrency prices can also depend on the economic situation in a country. So if the conventional financial system collapse, this affects people making them panic, which in turn affects the assets. This will make cryptos become a much better form of capital security. Then these crises have a strong effect on the price of virtual currencies. And this makes more people enter the market, making capitalization great.
4 Why can't everyone be a miner?
The Capital expenditure; To Mine requires hardware. And this hardware costs a lot of money. You need to install a Digital Wallet and you can install it on a computer, phone, or cloud. and this digital wallet is software that permits you to exchange cryptos with others. You will also need a Dedicated Mining Computer and the cost is over $3000. It does not end there you also need a Mining Program software.
The Efficiency; To Mine is very competitive. And one really have to be efficient to be able to compete with the other miners, because if you are not very efficient your marginal costs per bitcoin-like electricity bill will be higher than the value of the bitcoin at the end of the day.
Another problem is the "Risk"; Joining the above two points, if bitcoin goes bust, mining gets more competitive or your electricity price goes up, you might not be able to pay for the hardware you initially bought. So it too Much Risk
Because at the end of the day, after all, the expense of cryptocurrency mining, time, and money you put into mining, you can still end up with nothing.
5 Why can cryptocurrency transactions be called more transparent?
Cryptocurrency transactions are called more transparent because the transparency of blockchain allows all users a good opportunity to study the history of all transactions nothing is hidden.
6 Explain how the development of cryptocurrency in your country?
Explain how the development of cryptocurrency in your country?
Well the country am presently living in is Nigeria in Africa, the government here has ban people from trading in cryptocurrency. The central bank of Nigeria issued out a law that anybody cut with cryptocurrency will be dealt with, the person's account will be freeze. I have seen several people's bank account been freeze because of cryptocurrency after your account will be looked at in a month. It is really painful over here.
7 Conclusion
Cryptocurrency is better than the conventional financial system in many ways which were mentioned above, and another advantage is that it is decentralized. It is very transparent which makes it also better than the conventional financial system, although not everyone can mine it because it is very expensive and at the end of the day you might end up not making any profit. So it is better you invest by buying. A big thanks too goes to @steemitblog for setting up steemit crypto academy.
Hi @cryptocheta, Thanks for submitting your homework
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