Steemit Crypto Academy Contest/s2w1~ How cryptocurrency has shaped the financial Realm. What is its future? By @merci26

Hello friends,
Hurray! We are finally in the season 2 of the steemit engagement challenge after a short break that seems like an unending one. I am glad to be back, and the topic for this week here in the cryptoacademy community is an interesting one, as we will have to explain what cryptocurrency is all about, as well as it’s future. Read along with me as I dive into this great topic.

Users are expected to briefly give an overview of cryptocurrency.

Heard of the word Bitcoin? Or Ethereum? … well they are all called cryptocurrency. When I first started, I usually see Bitcoin as different from cryptocurrency. Well those tokens/ assets are all covered by the term cryptocurrency.

Cryptocurrency is referred as a decentralized digital currency that can be used for the regular buying and selling of goods, as well as making of payments like our regular local currencies, except for the fact that it was created using encryption algorithms. Cryptocurrency are numerous, and can be stored using a cryptocurrency wallet, which could either be found in our mobile phone or our computers. The encryption algorithm used in the creation of cryptocurrency makes it very difficult for a counterfeit to exist. The use of cryptocurrency is one of the safe methods with which online payments can be carried out, as it is very secure as it eliminates the use of middlemen.

Brief History of Cryptocurrency

The history of cryptocurrency could be dated as far back as the 1980’s. As at that time, due to the common issues faced by users who make use of their local currency, they sorted out for a currency that they could use, which is safe and could be sent to another user without being traced or noticed by a third party or through a local bank. David Chaum who is an American cryptographer created digicash in the year 1995. Digicash tried to solve the problem of security, as a user needs an encrypted key to send it, but it did not eliminate the middleman as one still needs to visit the local bank to be able to send it.

In the year 1998, Nick Szabo came up with another try, by creating the BitGold, where it’s users are able to gain reward by solving cryptographic puzzles. Everyone tried, but could not get the ‘unique’ currency that was free from middlemen. After several decades, some group of individuals or person known as Satoshi Nakamoto,who has continued to remain anonymous incorporated the ideas of David Chaum and Nick Szabo to create the first ever cryptocurrency known as Bitcoin, which is an electronic peer to peer cash system that does not require a third party for transactions to be carried out, and also makes use of an encryption algorithm.

Draw a comparison between cryptocurrency and conventional currencies.

1. Cryptocurrency is decentralized as it does not require a third party or middleman for one to be able to use it. Conventional currency makes use of middle men, and as such termed centralized
2. Cryptocurrency are stored in digital wallets which could be found in our mobile devices or laptops conventional currency are usually entrusted to bank officials.
3. Transactions using cryptocurrency are done by codes generated through algorithm. While that of conventional currency are through codes formed by financial institutions
4. In cryptocurrency, the transaction cost are usually low when compared with that of conventional currency. Conventional currency has a cost which in most cases are fixed.
5. Cryptocurrency are volatile, and it’s exchange rate is dependent on the level of supply and demand. Conventional currency exchange rates is dependent on the Economic condition of a particular country.

Similarities
• Both can be used as a means of purchasing goods as well as services

Explain the distinctive innovations of cryptocurrency and its downsides.

The innovations of cryptocurrency is much but I will just discuss 2 that are making news in the headline.

• Web3- with the creation of web3 system, transactions are sent through the use of blockchain and the blockchain plays a very important role in identifying the accuracy of the transaction with the help of its mathematical computing power. It tries to eliminate the centralized system of banks, where there is a third party, as this also helps to eliminate high transaction fees.

•Decentralized Finance (DeFi)
This is simply referred to as those applications that are built on blockchain. There are thousands of Applications that are built on the blockchain technology, and these applications make use of the smart contract. With smart contracts, agreements can be made by any individual by just having an internet connection, a person does not need to seek the consent of a third party before such automated agreements are made.

Downsides

• cryptocurrency are prone to hack, and this has resulted in loss of funds by most organizations as well as individuals
• It is used for criminal activities, since most transactions using cryptocurrency are not easily traced.
• When transactions are made to wrong address, it is totally impossible to retrieve such funds
• It is true that there are lots of innovation occurring in cryptocurrency, and this has resulted in inflock of more users. The speed at which most transactions are made are quite slow.

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

• There should be constant check and update on the security infrastructure of cryptocurrency to mitigate the problem of hack, rather than using the regular security of conventional banks.

• To speed up transaction rate, networks such as sharding, staking can be employed.

• Just like the Reversecoin that is trending, cryptocurrency can be reversed by allowing it’s users to create two types of accounts, where on can be used for day to day transactions, while the other account can be used for saving. The day to day transactions account, will be able to reverse assets that are sent to the wrong address by using the transactions I.d.

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

Well, the future is cryptocurrency,the world is fast evolving, same with technology. As each day passes by, people tend to think of better ways to invest their money, as well as earn from investing. More and more investors keep flocking into the crypto space there by increasing the rate of demand and supply. Some of the reasons why I see cryptocurrency as the future includes:

1. Cryptocurrency is one that provides easy way of transferring cash globally. It is quick, as well as fast as a result of this, cryptocurrency can be seen as future proof.

2. Cryptocurrency provides a peer to peer system there by eliminating the middleman and it’s also a currency to is easy to trade.

3. Cryptocurrency makes use of a very secure method, which is the encryption method which is translated into codes, and can only be read or accessed by the owners of the key.

4. The use of cryptocurrency is very flexible as one do not need to travel or try to locate local banks to be able to get as well as send cryptocurrency.

5. Cryptocurrency is decentralized, which is one of the major factor it will continue to grow into the future. It offers its users freedom in the sense that users do not need permission from government bodies to purchase any cryptocurrency. It is not affected also by any political upset.

Recommendations

As cryptocurrency are aiming at become a part of the mainstream financial system they may need to meet a variety of criteria, which includes

*mathematically complex but easy to understand for consumers, so that hackers and fraudsters have a difficult time exploiting it;

• being decentralized but with adequate consumer safeguards and protection

• maintain user anonymity without being used for tax evasion, money laundering, or other criminal purposes.

Conclusion

Since the creation of cryptocurrency, there have being improvements in the making of payments, as it is safe as well as easy. Despite all the numerous advantages attached to cryptocurrency, some improvements needs to be made, such as scalability, as well as cyber security.