Steemit Crypto Academy Contest / S2W1 - How Cryptocurrency has shaped the Financial Realm. What is its Future? by @josantos
Greeting great steemians, I am so delighted to be in this season's program for the very first week. This first week the contest is centred on the topic of how Cryptocurrency has shaped the Financial Realm. What is its Future? My review based on my little knowledge is seen below.
Users are expected to briefly give an overview of cryptocurrency.
Cryptocurrency is the combination of two different words cryptography and currency. Cryptocurrency is seen as a digital asset that is secured because of the presence of its cryptography. When we talk about currency, we are aware that it is an asset that is generally accepted as a medium of exchange. So the cryptography of the asset makes it secure and that is what cryptocurrency is all about.
Before the invention of cryptocurrency in the year 2009, the only thing used as the medium of exchange is the conventional currency. The conventional currency has a bit of limitation and because of that, the creation of cryptocurrency came into existence. Currency is normally stored in the bank which does not give users complete authority, some times they are even restricted from using it.
This is the work of a third party in the transaction of the currency. This limitation was worked on and that brought about the cryptocurrency where traders trade just between themself without any interference from a third party. The owners of cryptocurrency have total authority and control over the currency and for that reason, they can do with it whatever they want at any point in time. Cryptocurrency is stored in a wallet which has some aloha numerical keys which can not be easily comprised.
It is necessary to state here that cryptocurrency uses a technology known as blockchain technology. This technology is where everything about cryptocurrency is recorded. This means that if any transaction takes place or any new block is mined the details will be recorded in the blockchain for reference purposes. The technology is immutable that is it doesn't die or transactions recorded can not be altered.
The first cryptocurrency is the bitcoin token. This token was first mined in the year 2009. Ever since that period till this time, a lot of new cryptocurrencies have come into existence among these cryptocurrencies is the steel token that we earn presently on the steemit platform. Normally, cryptocurrencies work in a decentralized manner I.e the transaction is such that it is fast, transparent and reliable.
Draw a comparison between cryptocurrency and conventional currencies.
When we talk about the comparison between cryptocurrency and conventional currencies, we will be talking about the similarities and the difference between them.
Similarities
1-One of the unique similarity between cryptocurrency and conventional currency is that they both are used for exchange purposes I.e buying and selling of goods and services.
2- Another unique similarity is that both of them can work as a digital assets. We know have direct bank transfer where you get your money via electrical transfer.
3- The values of the cryptocurrency and the conventional currency normally are affected by the economic situation of the country then.
Differences
1- Cryptocurrency is used online I.e since it is a digital asset it can only be used electronically whereas, in the case of the conventional currency, it can be used both offline and online.
2- Prices of a crypto asset are never stable I.e the price fluctuates at regular intervals and for that reason, you can't say exactly what the worth of a token is within a range period whereas the price of the conventional currency is usually fixed.
3- Cryptocurrency is not generally accepted by all even in the country of residence but the conventional currency is generally accepted by all the residents of the country.
4- Security is one of the greatest attributes of cryptocurrency because it uses a format of the algorithm to produce an end-to-end encryption I.e the use of keys whereas the conventional currency which is stored in banks uses passwords.
Explain the distinctive innovations of cryptocurrency and its downsides.
Innovations of cryptocurrency are numerous but in this post, I will be discussing a few of them which include DeFi, NFTs, Stablecoins, Smart contracts etc.
1- DeFi: This is the short form of decentralized finance, this is a technology that uses blockchain technology in transactions to replace the traditional means of transaction where intermediaries are involved. This technology eliminates the use of intermediaries in every transaction.
2- NFTs: This is the short form for Non-fungible tokens. These types of tokens are very unique and they are only found in the blockchain and can not be replicated. This means that no two same NFTs exist in blockchain technology.
3- Stable Coin: As the name implies stable coin, is a token whose prices are stable and are pegged to the U.S dollars. This means that this asset moves alongside the U.S dollars. If the dollars increase the coin also increases.
4- Smart Contract: As the name suggests, a smart contract, a contract that executes itself if some predefined conditions are met between the buyer and seller is called a smart contract. This contract is a line of agreement between buyer and seller which is accepted by the two parties and if the condition is met, then the contract should be executed otherwise terminate.
Downsides of cryptocurrencies innovations
The downsides of these innovations include the following;
1- In the case of Defi, where the transaction is done just between buyers and sellers eliminating third parties if your asset is missing you don't have anyone to hold responsible. For example, transferring to the wrong address.
2- In the case of NFTs, the asset will be very expensive because it can not be replicated, unlike the case where you have a lot of the same asset and that will enable people to afford it and also hold it. The case of the NFTs is different because it is not replicable hence the owner will be the only person holding the token.
3- For a stable coin, the downside of it is that it does not increase exponentially like other tokens or currencies. This won't help you to earn a very good profit within the shortest possible time.
4- In the case of a smart contract, it has already been written in form of code which the system obeys, and the execution of the transaction only happens when the criteria are met. The problem is that it will take a little time for a modification. Let's say the buyer and seller need another criterion that will favour them both.
How do you think major problems with cryptocurrency can be handled? Let this be a response to the downsides highlighted earlier.
The problems with cryptocurrency can be handled if the listed points below are taken into consideration.
1- For loss of asset due to an incorrect address, a form of confirmation should be put in place when transferring an asset which will keep check of the transaction and the sender will confirm it again before the transaction is added to the block. Of the initiated transaction is sent, before adding to the block I.e execution, it should prompt the user or sender to check carefully the address and if it is not correct, it should be reversed.
2- NFT assets should be made in such a way that a replicate can be gotten for all the NFT assets though it may lose its value it will be affordable to almost everyone.
3- Stable coins should be allowed to have a minimum and maximum fluctuation space so that the price of the asset will some days make someone very rich within just a blink of an eye.
4- Smart contract should be made too rigid but let it be flexible such that it can be easily adjusted to meet the requirement of the people within that point in time.
Do you believe in the future of cryptocurrency? State your reasons. Any Recommendations
I say a very big yes when it comes to my belief in the future of cryptocurrency. The reason why I said this is because the innovations of crypto currency as we can see are already in circulation and moving widely to every aspect of life. The future is brighter with digital currency. Just like the technology world is moving rapidly without stopping, so also the crypto world is moving. As of 2009, we have just only one cryptocurrency but presently we have thousands of this asset.
My recommendation is that everyone who has not started using the crypto asset or has not started investing in it should do so now before it is too late. I remember a friend of mine who started this journey earlier enough, he made a lot of money for holding ethereum tokens. Cryptocurrency ought to be given more publication so that it can be known by all.
Conclusion
Cryptocurrency has shaped the financial realm by making transactions of assets easy and fast and also eliminating the presence of third parties in transactions. There are a few downsides of the crypto asset but that can be improved with time because on daily basis more innovations are coming into play. I want to invite @josepha, @predomina, @rad-austine, @olabillions and @yakspeace to also share their view on this contest too.
You have explained cryptocurrency and conventional currency very well, the similarities and the difference. The irreversibility of transaction you mentioned in the downside, has make some people loss their asset, maybe by sending to a wrong address and I hope they can heed to your solution thereby there would be confirmation of the address before sending or putting a stop to it if the address is incorrect.
Thanks for your comment my friend.
What a wonderful explanation about the crytocurrency. You have explained so well about the similarities between the cryptocurrency and the conventional currency.
But even at that the cryptocurrency is the best when it's comes to transections.
Thanks my friend for your comment
You are welcome
Indeed your contents are very educative and i have learned a lot. Keep it up.
You may check my link below
https://steemit.com/hive-108451/@ishayachris/steemit-crypto-academy-contest-or-s2w1-how-cryptocurrency-shaped-the-financial-realm-what-is-its-future-by-ishayachris
Thanks my friend for your comment.
You have given a very nice overview about cryptocurrency in today's post, very nicely you have been able to present it in front of us. You have also been able to differentiate cryptocurrency from our conventional currency. You also told us about some of its innovations. Such as stable coin, smart contact etc.
Thanks for your comment my friend.
I really love your recommendation, cryptocurrency is taken over the world and it best to start learning its ways now. It sad some people see cryptocurrency as only a form of investment and after losing some of this investment they lose interest in Cryptocurrency but hopefully in the future cryptocurrency price will be more stable.
Thanks for your comment friend