CRYPTOCURRENCY AND CONVENTIONAL FINANCE
Cryptocurrencies are digital currencies built using the blockchain technology ; which means that trade or transactions are carried out between pairs on a blockchain network and there are no such regulations that regulate who sells or purchases a coin,like conventional finance banks do, as anyone can easily carry out transactions using this currencies .
Cryptocurrencies became heavily popular in 2017 and everyone wanted to be a part of it because of the access that comes with it and the low costs associated with coin transfer .
Summarily, the main difference between the conventional finance and cryptocurrency is decentralization. The centralized finance is a centralized system that stores trade data or transactions in a central system and that central system(bank) has control over the monies in the accounts and can freeze the account, but trade information of cryptocurrency asset is stored or spread across many nodes ( distributed ) across a lot of nodes around the world thereby making it impregnable to hackers .
THE NEED FOR A DECENTRALIZED SYSTEM
Every trader is interested in a system whereby him and him alone has access to and chooses what happens to his monies and for him to perform smoothe transanctions without fear of fraud or theft .
The conventional finance is a system that is regulated by the government and at such, money can be frozen in the account of investors or traders pending investigations, and the processes and protocols are even more strenuous when transactions involve International parties , this end up making trade using the conventional finance slow and rigid and these regulations are not the best from the standpoint of the customers or traders.
Cryptocurrency has so far helped to bridge the gaps and make up for some of the lapses of the conventional financial system by Introducing global currencies with values independent of the local economy of countries, and this currencies are decentralized and trades are registered on a public ledger guaranteeing transparency .
Benefits of decentralization
1 Security : A decentralized system stored trade data in millions of computers across the globe and so even if a hacker gets access to a few nodes, much damage cannot be done because there are consensus protocols in place and the ledgers with all nodes are compared and a conclusion is reached.
A decentralized system has the ability to withstand byzantine nodes.
2 Transparency: Trades on a decentralized system is usually updated on a public ledger. Every node in a blockchain network is notified of every transaction that takes place in the network and everyone is involved in the policy making process by the federated voting systems . So a decentralized system carries everybody along.
3 Access : A decentralized system gives the trader full control over his or her asset, that is, he can do whatever he wishes with his or her coin and at anytime he chooses.
That means he is not restricted by bank closing time or weekends, as all that is required is a internet access and so the assets can be accessed very easily .
COMPONENTS THAT INFLUENCE THE VALUE OF CRYPTOCURRENCY
The Price of cryptocurrency assets can be affected by a lot of factors and some of these factors are explained below:
1 Future viability : The price of a coin rises when the demand for that coin rises . And one factor that can increase the demand for a particular coin is when traders perceive that the coin holds great promise due to partnership deals and the project behind the coin is a great one that can take a stand in the digital market in the nearest future .
2 Mass adoption : The value of a coin rises when more companies or brands begin to accept the coin as a means of exchange ( for buying their product) , because that will increase the demand for that coin especially when the brands involved are very popular and with lots of customers.
3 Scarsity or volume reduction : When the supply of a coin is reduced , the Price or value of the coin increases; provided that the demand is kept constant, so many cryptocurrencies undergo periodic burning of some volumes of the coin to reduce the volume in circulation in other to increase the value of the coin.
CAN EVERYONE BE A MINER ?
In theory everyone can be a miner but mining can be very difficult because of competition with other miners , and very expensive because of the hardware needed for effective mining.
Mining required an ASIC,GPU and electricity cost; mining consumes a lot of energy ,and all of these components plus the computer systems needed , will make buying of the coins more economical.
CRYPTOCURRENCIES AND TRANSPARENCY
Most Cryptocurrencies are open source in nature and anyone can view all the live transactions going on in the block chain using a blockhain explorer.
The codes of a coin can easily be gotten and verified by regulators. Every unit of a coin in a blochchain can be monitored and every transaction is there for all to see but the identity of the coin holders are not exposed .
HOW WELL IS CRYPTOCURRENCY DEVELOPMENT IN NIGERIA
Cryptocurrency has enjoyed some great times in Nigeria. Nigeria is generally a conservative country where people believe that cryptocurrency is like some infamous Ponzi schemes in the past and so there is general skepticism about cryptocurrency.
But the emerging age( the youths) has always seen the cryptocurrency space as their means of escaping the dark clouds of poverty.
Cryptocurrency enjoyed a boom during the 2020 covid-19 pandemic and the ENDSARS protest, all of these events led to the banning of cryptocurrency in Nigeria .
The government blamed the decision on the increasing use of cryptocurrency for committing wire fraud and the increasing activities of hackers.
CONCLUSION
Cryptocurrencies has so far proven to be a major player in our present and future transaction because of the efficiency, transparency, smooth access and security it provides.
Hi @mary241 , Thanks for submitting your homework
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