Aslamo Alaikum everyone. Every week we are learning something new about crypto world and filling our mind with the rules by following which, we can trade successfully. All thanks to the @steemit-pak and other member of this community who are working for the betterment of us. This week lecture is about the crypto currencies and blockchain. I am going to do the homework for the professor @mohammadfaisal. Let's begin

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Question1

What is a cryptocurrency and how it plays role in the blockchain?

Cryptocurrency

The most commonly used word in the crypto world is crypto currencies. There was a time when there wasn't concept of performing the transaction directly without involving the third party. All the transactions were done with help of any middle man. For example, if you want to transfer money to your parent who use to live in another city or country, you had to go to bank to complete your transaction. This process was time taking and expensive. The middle man cut his transaction fee.

But then a revolution occurred in the world. The world was introduced with the word ""cryptocurrency" where there was no need to involve any third person to perform your transactions. Cryptocurrencies are the virtual currencies which are available there on the blockchain network. There are hundred on thousand cryptocurrencies and bitcoin is the first and largest yet which was introduced in 2008.

There was a Person named as "Satoshi Nakamoto" who realized and took the problem of centralized systems and introduced a new way to perform the transactions. His invention has digitized the world to the great extent and now we have a securest and fast way to perform transactions from wherever we want.

The cryptocurrencies are totally transparent. This is the one of the most important feature of the crypto assets. There is no hidden from the people in case of crypto coins. So there are no chance of fraud. More over, these are built on the blockchain which is decentralized. So one one can hack that easily at all. So it is secure and fast way to perform your transactions

Blockchain and Cryptocurrency

You might have heard the word "cryptocurrency" with "blockchain". Blockchain is a chain of blocks. The data in blockchain is stored in the blocks and those blocks are then connected with each other and form a chain which is transparent and immutable. The data in the blocks cannot change and visible to all the member. The blockchain provide a platform to the cryptocurrencies to work. Some bigger cryptocurrencies have their own blockchain. Cryptocurrencies are the coins which need a proper platform to perform their functionality. Blockchain provide them such platform.

Blockchains are decentralized . It's mean there is no need of any third party to involve in order to complete a transaction. The transaction is performed P-2-P directly.

The first crypto currency is the Bitcoin which was introduced in 2008 by Satoshi. Many people might think the blockchain was also introduced at that time but it is not fact. The creation of blockchain is old than the bitcoin. It was created many years ago before creation of the BTC. The crypto assets work on the blockchain technology which enable them to perform transaction without interference of middle man or third person.

The blocks of blockchain contain information about crypto assets and are connected with each other through a specific algorithm. You can access the data stored in the blocks about the currency from anywhere. It is easy accessible to all.

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Whenever a person request for a transaction on the network, a block for that transaction is created. Hundred of thousand nodes are there who solve the mathematical puzzles and validate the transactions. They are rewarded for solving the puzzle before any other node. After validation, the block is added on the blockchain.

Main feature of Blockchain technology

Transparency: The blockchain is totally transparent. Nothing is hidden to any node.

Decentralization: The blockchain technology is decentralized. There is no need of any third person.

Cannot hack: The blockchain technology is decentralized so it cannot be hacked.

Immutable: The data once stored into the blockchain cannot be change or alter at any cost.

Question2

What is blockchain mining and what is Mining Difficulty?

Blockchain Mining

When a transaction is requested on the blockchain network, a new block for that requested transaction is created. That block is send to all the participants. The participants solve the mathematical puzzles to verify the transaction. The node who solve the puzzle first get reward. So the blockchain mining is solving the hard puzzles in order to create the new crypto coins. The node who solve the puzzle first is rewarded.

But it is not that easy. You need heavy machinery and high computational power to solve the puzzle. Once the puzzle is solved, the block is verified. The verified blocks then added on the blockchain which is a decentralized technology. All data is visible to all the member and no one can change the stored data ever.

Mining Difficulty

Mining Difficulty is the difficulties you face while mining. The mining is not as much easy process. You need heavy machinery and high computational power in order to get success. The node who solve the puzzle first is rewarded. But while mining, he might face multiple difficulties regarding to time, computational power, etc.

The more the participants, the harder to competition. If there are more participants, then there will be less chance of wining. Because multiple people are trying their best at the same time to solve the mathematical problem for getting reward.

Moreover, the block creation time is also a challenge for minors. Like Bitcoin is the world largest cryptocurrency where the new block is created after every 10 minute. Mean you need to solve the puzzle within those 10 minutes. When a node solve the puzzle, he is rewarded with the BTC and then the block is added into the blockchain containing all the information of that transaction. That information then visible to all the nodes and cannot alter ever.

Similarly if we talk about the Ethereum, then the 15 seconds are require to create a new block. Its mean the block creation time is much less than Bitcoin. The Ethereum is that's why a fast approach as compare to the bitcoin. Here the time become a challenge and difficulty for miners to solve the hash problems.

For mining, you need high computational power. The high machinery may require heavy cost.

Question3

Discuss Challenges for Crypto Minors.

1- High power consumption
The mining is also a source of income. If you solve the problem before the participants, you will be rewarded. But there are also some challenges. The power consumption is one among them. The creation of coin is not so easy. It require high consumption of power and energy. So the people who cannot afford this much power consumption, cannot participate in mining process. Only those nodes participate in solving the puzzle, who can afford the consumption of high energy. It is a bit costly in term of power so many people avoid mining because of the energy cost.

2- Block creation time
I think the block creation time is also a challenge for the minors. They have to meet that time which is specified for any coin for creation. The Ethereum block time is 15 second. SO minor have not much time to solve the puzzle.

3- The eligibility criteria
There are some cases, where only those people can participate in mining who have a certain amount of coin and asset in their wallet. The more the coins you have in your wallet, the more chances of becoming the minor.

4- Heavy Machinery
You cannot perform mining with your normal PCs or laptops. To become a minor, you need a heavy machinery with more computational power. So it is costly.

5- Hacking
Hacking is also a challenge for the minor. The hackers can attack the machines of minor and can take out the amount of minor. Some methods are their on blockchain who provide security to the minors but still no system is 100% safe and secure.

Question4

What is DeFi (Decentralized Finance) and discuss any DeFi project in detail?

Defi stand for decentralized finance. Decentralized finance mean there is no involvement of third party. No central party is needed in decentralized finance. All the financial dealings are done directly person to person. There is no owner of the decentralized system. The users are the main and most important for the system. There is also no server to store the record of whole system. All participant nodes are actually use to store the record of the network.

The decentralized finance is totally opposite to centralized. In centralized, there is always the concept of third party. If we talk about transferring money in centralized way, then bank will be act as the third party. You will transfer your money through involvement of back as the third person. The centralized systems are owned by a person or group and they run it according to their own rules. There is nothing to transparent and can be hacked easily.

But this is not in case of Decentralized finance. The deals are done here directly between the producer and buyer without any middle man. Every thing is transparent so no chance of committing any fraud activities. The defi technology was introduced first in 2018 on the Ethereum blockchain to enhance the functionality of decentralized system and to enable the users to perform more task.

The user have full control on his account. No one can access his asset without his permission so the security is high. The user is enable to perform transaction whenever he want throughout the world. The transactions are P2P without having concept of middle man.

Uniswap

Many decentralized finance applications are there but i am going to discuss the UNISWAP for this question. The Uniswap is based on the Ethereum blockchain where no need to any middle man to perform the transaction. The users directly deal with each other and completed their tasks. The Uniwap is not bounded to some specific users. Any one can use this at any time without any initial requirement or limitation.

The user can exchange the tokens with Ethereum wallet. It is highly secure and no third party have access to your wallet and cannot alter or access your personal information and assets. The token use for Uniswap is UNI. This project get the popularity rapidly among the traders because of its security, availability and transaction fee. The transaction fee in Uniswap is just 0.3%. Now i will explore the UNi token on the coinmarketcap.com

The above is the trading view of the Uniswap. We can see that when the candle are green, the market is going up. The green candles are showing that the market is trending upward. The uptrend is the good spot to sell your assets. Similarly the red candles show the market is trending downward. The downtrend is good spot to buy the coin because price of coin is low in bearish season.

The Uniswap is at Rank 11 with price 29.97 dollar and market capitalization $18,331,446,730. The Circulating supply of Uniswap is 611,643,723.83 UNI and 24 hour trading Volume is $453,357,550.

This is listed on very high ranked exchange markets such as Binance, Huobi global, Bithumb, Coinbase exchnage, etc. This show how popular and high rank the Uniswap is.

Question5

Advantages of Decentralized Finance.

Transparent: The most important feature of the decentralized financial system is transparency. The Defi are totally transparent. There is nothing hidden so it is not possible for someone to perform some illegal or fraud activity.

Immutable: The defi are immutable. Once you store the data in blocks on the network, it is not possible then to change it. The data is immutable. No one can change it at any cost.

No Central Party: In Defi, there is no need of any central party. The deal is done between producer and buyer directly without involvement of any third person or middle man. The process is fast because P2P transactions are performed.

Less costly: If you go to bank to transfer money to your parent who live in another country, the bank will act as third party in that case and will deduct its fee which is not a tiny amount. But if you use the Defi technology to transfer the money to anywhere, you can with small transaction fee. So Defi is less costly.

Time: The Defi system not save your money only but save your time too. For example if you use the centralized system to transfer money, you first need to go to bank, then wait for your turn, the bank will perform some of its processes and then transfer your money. Then receiver will also go to bank, will wait in que and then will receiver your sent money. Its time taking. But in defi, you can sent money throughout the world within no time. Just with help of internet and a device, you can transfer as much amount as you want without any limitation. And receiver receive money just after you send him.

Exchange currency: We are seeing that the world is getting digitized so fastly. We need to take some imporatant steps to be part of this world. The Defi help you to exchange your money(like dollar, rupees) into a digital currency like BTC, ETH etc.

Security: The Defi is decentralized. There is no a single owner of this system. Not a single server to store the whole data. The data is store in all the nodes so it become hardest for hacker o hack the system. Because he cannot hack thousand of computers at once. So Defi provide you high level of security.

Conclusion

The cryptocurrencies are becoming need of time. We cannot deny the importance of the crypto assets and blockchain. We have studied the cryptocurrencies and blockchain in detail and learn the connection between these two. Then we discuss the blockchain mining. The blockchain mining difficulties then discussed and then decentralized finance are studied. I have discuss the Uniswap in detail and analyze it through coinmarketcap. At the end, the advantages of Defi are explained in detail.

Thanks to @mohammadfaisal for this amazing lecture.