Steemit Crypto Academy Contest Season 2 Week 1 - How Cryptocurrency has Shaped the Financial Realm. What is Its Future? by @numanfarooq7677

Cryptocurrency is considered as a medium of exchange and it is digital currency that has not physical appearance. Now cryptocurrency is quite similar to real word currency just that it does not have any physical embodiment. It also uses the concept of cryptography to make it secure. There is a limit of cryptocurrency to how many units can exist. Such that in case of Bitcoin there is a limit of 21 million, so after this no more bitcoins will be produced.

We can easily verify the transfer of funds, now the hashing algorithm that bitcoin uses makes it very easy for the user to determine weather the transaction is valid or not. Cryptocurrency operate independent of a bank or a central authority. It works in a decentralized authority. If we want to add new unit there are certain conditions. For example in case of bitcoin we can only add new unit after the new block has been added.

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Cryptocurrency is the latest attempt to reinvent the way we exchange money throughout human history. Bitcoin began the cryptocurrencies revolution when it launched in 2008. The origin of cryptocurrency is off course the related to the beginning of internet that revolutionized the world. David traum is widely regarded as pioneer in cryptocurrencies.

In 2008 following recession a person or a group by the name of Satoshi nakamoto released the bitcoin white paper.So the first decentralized cryptocurrency that solved the double spend problem. The actual bitcoin blockchain did not start until January 3rd 2009 with the genesis block where the first bitcoin block that was added to the blockchain.

The most important part of cryptocurrency concept is that it must be secure. So In order to make the Crypto currency secure we use the concept of cryptography. Cryptography is actually end to end encryption that makes our currency secure. In this case the plain text is converted to cipher text, so if anyone access to our data , they enable to read it because it only can be converted to plain text by using a password.

Draw a comparison between cryptocurrency and conventional currencies.

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Cryptocurrency	Conventional currency
Cryptocurrency is completely a decentralized currency which is not backed by any government. Cryptocurrency is based on the blockchain. Here in this case the owner itself verify the transaction.	Conventional currencies are backed by government of that country. Conventional currency is printed by government its value increase or decrease with respect to the progress of the country in term of economy
Cryptocurrency is limited. We can mine cryptocurrency up limited number such as bitcoins to 21million as I discussed above.	while in case of conventional currencies bank can print any numbers of currency. But here the problem of inflation, because if the more currency is printed then inflation will increase and economy of the that country will be under great pressure.
Cryptocurrency is borderless. If we move from Pakistan to US or any other countries there is no need to exchange the Crypto into others currencies.	While the conventional currencies are bounded by the boarder. Because if we have Pakistani rupees and we move from Pakistan to US then we need to convert that Pakistani rupees to US dollars.
There are certain password and keys of the wallet and exchange where we keep our cryptocurrencies.	In case of conventional currencies there is no such password or keys are present because these are present in physics form.
As we know that cryptocurrency based on decentralized system so it is considered more secure than the conventional currency	Conventional currency are considered less secure as they use conventional system for storing and securing the currency.
If we talk about the trust of the user in case of cryptocurrency, user has less trust because there is no central authority is present.	While in case of conventional money where people put there money in banks and other central authorities, they have more trust and satisfaction there as compared to decentralized system.

Explain the distinctive innovations of cryptocurrency and its downsides

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Decentralization

Cryptocurrency system is a completely decentralized system that is peer to peer payment network. Traditionally in order to verify monetary transaction and preventable spending a trusted central authority which can keep track of account information like banks or PayPal was needed as a middleman. Cryptocurrency circumvented this by spreading the transaction and balance data across an entire network with each node in that network containing a complete history of all transaction using the currency. So here network itself verify the transaction. So in case of cryptocurrency we did not relays on middleman authority or any bank etc.

Security of the cryptocurrencies

People are more concerned about the security of their money. They always tend to move where they feel safe and sound. When we talk about the cryptocurrencies these are highly secure and safe. Here we have the password,keys that makes our assets more secure. In case of cryptocurrency we secure our assets by the concept of cryptography. In this case no one access to our data and assets so users feel safe to move towards cryptocurrency. This is also a great innovation of cryptocurrency.

Transaction fee

Another great innovation in the cryptocurrencies is low transaction fees as compared with conventional currencies. If we make transaction through conventional system such as banks or jazz cash system there is huge amount of fee while in case of cryptocurrency there is very less fee even in some cases it is very negligible. Even in case of transaction from binnance to binnance is totally free. So it is also a great innovation of cryptocurrency.

Blockchain technology

Cryptocurrency is totally based on the blockchain technology. In this technology the whole information is stored in large number of computers. This stored data is handle in all the computers and if someone tries to change the data from one computer it will be shown in all computers that are interconnected to each other. So in this way culprit can be catched.

Downsides of cryptocurrencies

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Illegal Activities

There are illegal activities occurs during the transaction of cryptocurrency because it is highly secure and hard for government to track down a particular user by their wallet address. Cyber criminal have often used BTC as a mode of exchanging money and various illegal activities such as dealing of drugs on dark website , furthermore some people use cryptocurrencies to convert their illicitly obtained through a clean intermediary to hide the source.

Volatility

Another downside of the cryptocurrencies is the volatility of the crypto market. Due to its volatility we may end up with great loss as well as the price of the Crypto coins keeps on changes in a short period of time and other various issues such as hacking incidents can results in losses tax implications. It is worth noting that IRS has suggested that virtual currency transaction are taxable by law.

Data loss

As there is no middleman in cryptocurrency so no one can recover your lost data. Now a days developers aims to create source and links codes that is virtually untraceable impenetrable authentication protocol and strong hacking defense have made it safer to put your money in cryptocurrencies however if you somehow lose your private keys of wallet you cannot get it back. Without the private key your wallet will remain locked and you cannot take your coin out

No Cancellation Policy

Another major drawback of cryptocurrencies is that if a disputes occurs between the concerning parties,the sender cannot retrieve the coin and if you mistakenly send coin to wrong address you cannot get them back.

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

Cancelation of transaction

In order to overcome the disadvantage of cryptocurrency we can give some suggestions such as cancelation of the transaction that may occur mistakenly. It is the major drawback of cryptocurrencies that we can not cancel the transaction that already send. By having this option we can cancel our transaction if there is scam or out transaction done mistakenly.

Improve scalability

Security,, Decentralization and scalability are all valuable properties that contribute to the success of blockchain network. These three are the basis of blockchain scalability trilemma which assert that no blockchain network simultaneously possessed all three properties. Such as bitcoin and Ethereum are decentralized and secure but not scalable. So if there are large number of people's who want to pay fees by bitcoin they have to wait for long time. So its solution is that proof of stake mechanism by adding different nodes to it will be helpful. By adding new nodes the transaction per second of blockchain all improve and thus its scalability wil also improve.

Proper Team work

In different companies we see that there are customer care center are present who always tries to help other to overcome their problems. Similar case should be with cryptocurrency in order to overcome its disadvantage. The owner of cryptocurrency network or blockchain must develop a certain number or website where customer can contact and go for solution of their problems.

Solution of Data loss

Although there is no solution of recovery of password pr keys as there is no middleman is present but we can protect our data by not clicking on the fake or hacking links.

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

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When computer scientist talk about the concept of decentralization they actually mean is to avoid the idea of single point failure. A single point failure is like we have with institution, suppose you have money in single bank,and that bank fails,and run out of money but if you have lots of different individual nodes, hard drive and phones and so on,that have some money and they not all gonna fail at same time, so that is why here you no longer need a middleman to keep a track of internal ledger.

If we talk about the future of cryptocurrency until 2030 cryptocurrency would occupy 25% of the national currency. It will also increasingly accepted by merchant and customer and it will continue to have volatile nature. People always tries to be more convenient and safe about their money so in the concept of Decentralization people consider it more convenient or consider a freedom for themselves because they do not need a middle man here.

There are people such as elon musk , bill gates are supporting the cryptocurrencies and even the Tesla motors of elon musk is accepting the cryptocurrencies as a money. New emerging er of cryptocurrency ATM are also under discussion which will also make cryptocurrency future bright.

The future of cryptocurrency is also very bright because when we move from one country to another there is no need to interconverting the cryptocurrencies as compared to conventional currencies. So people feels this as comfort for themselves.

There are some suggestions that will make cryptocurrency more valuable these are as some cryptocurrency are used in illegal activities and also in black money. Government could not investigate them. We can overcome this issue by keeping complete record of the transaction and these can be checked when needed in necessary conditions.

Another suggestion is that people must ensure that cryptocurrency will remain in future, there currency will be remain just like other currency because due to recent phenomenon of LUNA , people trust decrease on cryptocurrency and they start believing that it is a type of scam but as we know that this is not true , I believe that cryptocurrency is the future and it will replace the conventional currency.

Conclusion

So here I concluded that cryptocurrency is a digital currency that has bright future. People consider cryptocurrency as source of comfort for themselves. Due to certain invention in cryptocurrency that includes decryption, encryption system, decentralization system, low transaction fee and fast transaction makes cryptocurrency more favorite to the people.

There are some flaws that related to cryptocurrency including volatility, scalability etc these must be improved so that we make our future bright with the help of cryptocurrency. So it is our need to make ourselves up to date with modren world and I believe that cryptocurrency is the modern currencies and also has bright future.