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This is my entry in the contest sponsored by @steemitblog: Steemit Crypto Academy Weekly Update #14 [ May 17th, 2021 ]. Homework Post for @levycore [ Indonesia ] - assisted by @alphafx [ Nigeria ]: Steemit Crypto Academy Season 2: Learn About Cryptocurrency. I invite all Steemit.com users to join. @juanmolina @betzaelcorvo @corinadiaz

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1. What is the fundamental difference between cryptocurrencies and conventional financial systems?

A cryptocurrency itself is a computer software represented by virtual tokens which can be freely exchanged between users and assigned a certain value associated with money.

It is based on a decentralized system where the client has full control of the asset, accumulating such cryptocurrencies in a wallet of which he is the sole owner and holds the private security keys.

As many negotiations as desired can be made between interested parties through a smart contract.

Blockchain is the technology where it becomes possible to build platforms for the use of encryption and the offering of tokenized products; In such sense, the value of a cryptocurrency will be based on the adoption and utility that can be given to it.

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Creating the crypto-assets market which depends on supply and demand representing a new economic model with great financial potential since it supports a great diversity of virtual assets that can be used at any time and from anywhere in the world with guarantees of security, traceability, adaptability and scalability without depending on any central entity.

According to the above, cryptocurrency is decentralized and its growth and adoption is based on the trust placed by users.

The conventional financial system is dominated by fiat money (FIAT) under certain regulations for its use and issuance.

The value of the FIAT is related to some consumer product or raw material, for example, in some nations the gross domestic product such as oil is the main support of the economy of the countries and the backing of the money.

The conventional financial system remains under the tutelage of national governments and the administration of resources is done under certain bureaucratic parameters specific to each nation which constitutes a centralized system that makes possible the management of money through banking corporations.

The conventional economic model is subject to inflation since goods and services are paid for with fiat money. This makes the stock market dependent on a production and supply chain where supply and demand have a direct impact on retail prices and therefore purchasing power depends on the liquidity capacity of wages and salaries.

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With this brief introductory review, the marked differences existing between the decentralized financial system whose economic unit is the Cryptocurrency and the conventional financial system dominated by the FIAT can be clearly appreciated.

The fundamental difference being that decentralization enjoys autonomy and is not distributed by any dominant central entity, on the other hand, the conventional financial system is directed by an employer or central figure and transactions are monitored and require the intermediation of third parties to be managed.

2. Why is a decentralized system needed?

Nowadays, human beings need to have access to an economic model where they can manage their income in a safe and effective way. Technological progress on a global scale makes use of the Internet for practically all types of operations related to daily life.

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The management of virtual assets through blockchain allows the registration of a public ledger where any transaction or negotiation between parties can be carried out transparently leaving an auditable record which is incorruptible.

This indicates that Blockchain technology constitutes an administrative tool of great potential that can be used by any instance, person, corporation, including public institutions, to make their financial management improving the current conventional model.

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The decentralized system is necessary for several reasons, among them:

• It improves service delivery:

A characteristic of decentralization is that both the economic system and the products offered are automated and can be accessed through an online connection, this means that the customer saves time and money in the processing since the entire process is virtual and adaptable to the needs of each person.

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• Raises the quality of life

In the same way people can take advantage of the Blockchain to solve any kind of problem in everyday life, such as: access to education, goods and services, work, social networks, finance, health, industry, research, science and technology, etc. Making use of cryptocurrency as the main asset which means a considerable increase in their level of economic growth and consequently a higher quality of life.

It has been demonstrated that in the current stage of confinement that has been going on worldwide for more than one consecutive year, caused by the impact of the COVID-19 pandemic, many people have been able to save economic resources by using encryption as an economic asset to avoid devaluation and control their values through virtual wallets in a secure and autonomous way, largely dispensing with FIAT money and banking institutions. Likewise, the educational process in schools and universities has become feasible through virtual classes after the so-called #quedateencasa. Some people, as is my personal case, have been able to work in decentralized platforms as continuous publishers and earn an average income which serves as a livelihood to support our families especially in terms of food and other basic needs, such as access to medicines. Avoiding exposure in public places and contributing with biosecurity measures to preserve health and reduce the possibility of contagion.

These are just some of the advantages offered by the decentralized system to today's society which makes clear the need to adjust to blockchain technology and the new economic model based on cryptocurrency as a way out to the new demands of the modern world.

3. What affects the value of cryptocurrencies?

• Adoption and usability

The value of a cryptocurrency depends on mass adoption and buying and selling activity in the virtual asset market.

When users consider a crypto to have real utility and investing in it would lead to securely accumulating value, at that point a positive impact occurs leading to adoption.

Crypto environment news

Similarly, there are other events that also influence the value of a crypto asset refers to market news and activity on Exchanges. The crypto market handles a certain amount of speculative information about cryptocurrencies which generates an influence on the masses which may resort to trading with the intention of selling or buying to obtain some margin of profit.

Such is the case of most recently on the rise in the value of BTC, when entrepreneur Elon Musk decided to invest $ 1.5 billion USD through Tesla Motors which generated an impact on BTC leading to reach unprecedented levels. Similarly, a little later he also issued an enthusiastic message about the DOGEcoin through the social network Twitter which positively impacted the price of DOGEcoin putting the coin on the rise for weeks and making it reach great level of capitalization to a crypto that in its trajectory had never had a high value.

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• Exchanges activity

Exchanges are more than a token exchange system, they also usually offer customizable financial products. Even, usually each recognized Exchange creates its own cryptocurrency to compete in the stock market. Exchanges can function as brokers for trading by offering exchange wallets which are used for spot trading.

The listing of a cryptocurrency on exchanges affects its value and gives it a certain positioning in the market as it has greater customer exposure and access to the asset to trade. It is estimated that when a crypto is accepted in most exchanges its value is considered more stable due to the demand and ease of buying or selling.

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As mentioned in the previous segment, we can see that there are several factors that can affect the value of a cryptocurrency but it is concluded that "buying and selling" is the main factor that affects the price of the Cryptocurrency, causing volatility.

4. Why can't everyone be a miner?

The mining process consists of finding the solution to complex mathematical problems through the use of computer technology in order to create a hash that allows encrypting the information on the blockchain. To achieve this a miner must be extensively prepared with a high technical knowledge in the area of encryption must have equipment (mining platform) of great computational power whose resources contributes to the network of distributed nodes that work uninterruptedly under a certain consensus system.

The results are transmitted to all nodes connected to the network for validation and finally packaged and added to the blockchain.

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According to the above, to be a miner you must have equipment that must meet certain technical specification in terms of cPU and GPU capacity to operate, likewise, the miner must have the knowledge on encryption and Blockchain technology sufficient to be able to intervene in the activity of block creation and maintenance of the Network.

For this reason "Mining" is a decentralized activity adapted only for those who meet the aforementioned requirements..

5. Why can cryptocurrency transactions be called more transparent?

Cryptocurrency transactions are achieved by creating a smart contract which contains the transaction data requested by the parties through a P2P system. The transaction remains blocked until consensus is reached, at which time the operation is released and the parties are satisfied leaving an encrypted record which is stored in the public ledger of the Blockchain where it remains incorruptible with the possibility of being consulted at any time or in case an audit is required.

As can be noted, cryptocurrency transactions comply with all the technical and administrative parameters required to operate with finance. At the same time the system offers autonomy and security necessary to carry out any agreement.

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The blockchain registry allows the traceability of operations from the moment of initiating the operation to the end point of the agreement, this implies that the management of funds and their destination can be tracked, while preserving anonymity. There is no exposure of sensitive data and no need to register your identity in order to operate.

In this way, it is widely explained why cryptocurrency transactions are more transparent; firstly because they are carried out directly between the two parties involved through a P2P system without the need for intermediaries. Then the operation is carried out in an automated way through the implementation of a smart contract to finally achieve unanimous consensus on the blockchain keeping an auditable public record which remains in time and cannot be erased.

6. Explain how cryptocurrency was developed in your country.

In my country "Venezuela" the Blockchain represents a socio-productive system with infinite possibilities of participation which can be linked to the development of society by its integration for work and the generation of sustainable financial benefits. Many of us have been able to cover our basic needs, make some kind of savings or acquire some material good thanks to cryptocurrency.

First of all, it should be noted that the Venezuelan economy is going through a state of hyperinflation where it is extremely difficult to access goods and services, food and medicines. Wages and salaries are insufficient, which is why the population has had to resort to alternative methods of financing. Such is my case, since I currently work 24/7 from my home connected to the decentralized platform Steemit.com, in this way I manage to obtain income proportional to my performance, which serves me to guarantee food for my family.

I have been able to notice that the adoption of cryptocurrency in my country has been done mainly through participation in decentralized social media platforms; you can see people of all ages posting daily on their blog and getting rewards in cryptocurrencies. I know of other cases of Venezuelan traders who are engaged in trading virtual assets in order to earn profits from Exchanges.

To give a tangible example about how cryptocurrency has developed in Venezuela I will try to talk about a case of adoption of the crypto asset "DASH" with which it is possible to trade in this country.

There are some financial services companies that make it possible to buy DASH with FIAT or with national fiat currency (BsS.), among them it is worth mentioning "Cryptobuyer.io" which is a platform where you can open an account and after a respective verification process the portal makes available a virtual wallet where you can deposit the sovereign bolivars (BsS.) destined to acquire DASH. Not only does it become possible to trade DASH with national currency but also other cryptocurrencies accepted by the system such as: Bitcoin, Litecoin, etc.

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Activated since November 2018 cell phone service (Dash Text) that allows transferring Dash via text messaging. Dash Text is a P2P system that uses the available resources of smart devices to complete transactions and thus does not rely directly on the local Internet which currently has failures and interruptions.

I have cited the previous example linked to the DASH currency because it is one of the most relevant use cases in the country, however, there are several types of options for exchange and investment in cryptocurrencies.

Advances in the development of cryptocurrency in Venezuela

Sunacrip

In Venezuela there is the National Superintendence of Cryptoassets and Related Activities (Sunacrip) which is an autonomous body created in October 2018, in charge of the supervision, regulation and control of processes related to virtual assets.

Petro

In particular, Sunacrip has been created to support the development of "Petro" as a digital currency which is predicted to bring benefits to the country's monetary economy.

For this, it is planned to develop new technological tools and platform investment in order to achieve legal and institutional strengthening in this area.

7. Conclusion

The conventional financial system is managed by a central entity under certain regulations for the use, management and issuance of money, on the other hand, decentralization is a free system where anyone can access the economic model and have absolute control of their assets without intermediaries; this represents the fundamental difference between the two financial models.

On the other hand, it is concluded that the need to adjust to blockchain technology and the new economic model based on cryptocurrency as a way out to the new demands of the modern world becomes the main reason for adopting the decentralized system and consequently this will bring improvements in the provision of services and in the quality of life of human beings.

In the current stage of confinement motivated by the COVID-19 pandemic the economies of countries have suffered some decline, some workers have lost their jobs and inflation has taken over the markets, in contrast to this, there are people who have found in the Cryptocurrency a way to preserve the value of their savings in addition to resorting to decentralization as a way of working to ensure family income while remaining safely in their comfort zone complying with quarantine.

Regarding the reasons affecting the value of Cryptocurrency we conclude the following: It is the auction activity that occurs on a token, that competition to offer the best price in a negotiation, that is the factor that decides how much a crypto will be worth at any given time;

Beyond adoption, usability, marketing and speculative news in the crypto environment, which are factors that can affect the price of cryptocurrency, the real reason that affects its value is the "Supply and Demand", that is, the buying and selling activity that users exercise in the trading of crypto assets, which creates the effect of "Fluctuation" in the stock market.

It is important to clarify some points about cryptocurrency mining; according to the study conducted in this post, to be a miner you must have equipment that must meet certain technical specifications in terms of CPU and GPU capacity to operate, likewise, the miner must have sufficient knowledge about encryption and Blockchain technology to be able to intervene in the activity of block creation and maintenance of the network.

For this reason, only those who meet the aforementioned requirements can be miners. In itself, mining is a decentralized activity open to the public, but it will be up to the interested party to make the investment in hardware and minimum knowledge required to be able to intervene in the development of such activity.

Another relevant aspect of cryptocurrency transactions is reliability.

In this sense, such crypto transactions can be called "more transparent", because they are carried out directly between two parties without the need of intermediaries, leaving stored in the Blockchain an indelible public record that allows traceability and is open to possible audits.

Blockchain has an IT infrastructure that allows us to carry out joint projects effectively, which can be materialized by simply using a PC or smart device from the comfort of home. For some of us, today it may represent a form of additional income or a system of emerging economy to solve the crisis, but according to the proper management and vision of the future that we can give it, perhaps it could become a definitive financial solution as our main source of work.

In Venezuela the development of cryptocurrency has advanced greatly as a search for a solution to the economic crisis, but in the same way many are beginning to understand that decentralization is the new financial model that fits the needs of modern life, thanks to its transparency, security, adaptability and scalability that promises sustained growth for the coming years in our country.

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Cc: -
@steemitblog
@steemcurator01
@steemcurator02
@levycore
@alphafx

_{@nachomolina2
Original content}

_{Venezuela
2021}