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## "The bigger thing with bitcoin is not bitcoin itself, but what does that decentralized technology really do?"
### Ashton Kutcher</center>
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[Source](https://pixabay.com/es/vectors/verde-pizarra-tiza-borrador-307835/)
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## **Steemit Crypto Academy Season 2 Week 6 || Learn about Cryptocurrency by @levycore**</center>
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In 2009, after the various economic measures adopted by most governments to curb the effects of the "Great Recession", caused by the bursting of the real estate bubble in the United States, and which included the injection of large resources into the global financial system, and the manipulation of exchange rates, an enigmatic character known by the pseudonym **Satoshi Nakamoto**, decided to create a currency for universal use, and which would be outside the regulations of governments and financial institutions worldwide, and for which he provided the necessary technology for its development.
This is how the first cryptocurrency in history was born, the **Bitcoin**, whose name eventually became a generic term to designate erroneously and indistinctly all cryptoassets existing today.
In this post we will seek to answer the questions raised by Professor @levycore in the assignment corresponding to the Sixth Week of the Second Season of the **Steemit Crypto Academy**.</div>
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## *Differences between Cryptocurrencies and the Conventional Financial System*
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Fiduciary money (FIAT) as well as cryptoassets, a term that encompasses cryptocurrencies and tokens, have at least 3 basic functions that characterize them:
+ First, it is a **means of payment** to cancel the acquisition of goods and the provision of services.
+ It is an **accounting unit**, which makes it possible to calculate the cost of goods and services traded in a given geographical area through a commercial agreement.
+ Thirdly, it is a **reserve of value** that allows savings by preserving its value over time.
However, there are major differences between cryptoassets and conventional money as a result of their form, origin and operation.
Conventional or FIAT money is the legal tender in each country, and is physically represented in the form of paper money (bills or banknotes) or metallic coins; in electronic form through the existing deposits in the banking system, and in addition, it is the central banks that are responsible for its issuance, and consequently, they have the power to control how much money circulates in the economy.
By contrast, cryptoassets do not have the status of "legal tender" in any country, their issuance does not depend on central banks, nor are they subject to regulation by any government agency, so they are decentralized assets. In addition, their quantity and availability is determined by an algorithm, which controls the supply.
Another characteristic that differentiates cryptoassets is their *anonymity*, because although each transaction is verifiable and auditable, it is not possible to know the identities of the issuer and the receiver, unlike the conventional financial system.
Another point in favor of cryptoassets is the *immediacy* of the transactions, inside or outside the different national borders, and the low commissions they generate, unlike the transfers made through traditional banking, which usually take hours or even days when they are international, not to mention the costs associated with commissions, usually higher.
However, the cryptographic universe is not free of disadvantages in relation to the conventional financial system, among which we should mention, the *anonymous* nature of the transactions, which lend themselves to illicit purposes; the *irreversibility* of the operations, so that if the user makes an involuntary mistake by depositing in an address that does not correspond to the receiver, these funds are "lost" and cannot be recovered; and finally, the very high volatility in the prices of crypto-assets.</div>
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## *Why is a Descentralized System needed?*</div>
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The *blockchain* is the technology on which the various cryptoassets operate, and is developed on principles that resemble a "shared ledger", where all transactions are distributed among multiple independent nodes (users), which are responsible for the registration and validation of information, not requiring an intermediary for its realization.
The transfer of data through this decentralized network is completely secure thanks to a very sophisticated encryption, so that once the information is entered, it cannot be altered; on the contrary, only new records can be added. Furthermore, this information will not be validated until the majority of the nodes agree to do so, using various consensus mechanisms.
The network offers its users absolute control over their assets, not requiring the participation of a supervisory or regulatory body to dictate the terms and conditions of operation, and can be accessed at any time of the day and anywhere in the world.
The reliability, immediacy, anonymity, ease of access, low transaction fees and auditability of operations give the *blockchain* enormous advantages over centralized networks.</div>
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## *What affects the value of cryptocurrencies?*
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There are a multiplicity of factors that determine the value of cryptocurrencies at any given time, which can lead to an upward trend or a sharp fall in their market value.
Firstly, cryptoassets are not subject to supervision by regulatory bodies, nor are they backed by physical assets, governments or multilateral organizations, which can generate a certain sense of insecurity among investors in the event of a market correction, and can generate panic leading to greater losses.
As in any economic area, the emotional state of investors in the face of news can affect, in one way or another, rational decision making. A proof of this has been the recent declarations of the South African tycoon **Elon Musk**, regarding the acceptance, at first, of **Bitcoin** for the acquisition of **Tesla** vehicles, and its subsequent rejection, alleging the use of large amounts of fossil fuels for its mining. Likewise, the partial or total restrictions adopted by some countries, such as China and Turkey, and the threats of others, have considerably affected the crypto market.
Another aspect to be taken into account is that of the large holders of cryptocurrencies, who at any given moment can influence or manipulate at will the quotations, forcing the rest of the investors to follow the path they set at the beginning of the market.
Finally, there is a "Fear and Greed" indicator, which is useful for investors to know a little about the psychology of the current market, particularly in these turbulent times.</div>
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## *Why can't everyone be a miner?*
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Mining is a process that consists of validating and recording transactions that take place on the *blockchain*. It is performed with the help of powerful computers with high computing power, for which all nodes of the network participate in the successful resolution of complex mathematical problems.
This work requires great effort and high computational power, which ensures that it is difficult to write new transaction blocks into the register, and thus prevent a hacker from altering an existing block or creating a fake block and adding it to the network.
Not all cryptocurrencies work in the same way, since the mining process depends largely on the algorithm used by each one. However, they all have one thing in common: miners are not performing useless operations, but are necessary to maintain the security and stability of the network. In return for performing this important work, the miners receive a reward for their mining work.
It follows from the above that expensive and highly sophisticated equipment with high computing power is required to perform these complex mathematical operations, particularly in the case of **Bitcoin**, which is not available to everyone. In addition, it is desirable, although not indispensable, that the miner has skills and knowledge in the area of mining.
On the other hand, the mining process consumes a large amount of energy, which could be a disadvantage in those regions where electricity service is expensive or unreliable.
Some countries have partially or totally restricted the mining of cryptocurrencies in their territories, even though they do not have legislation that explicitly prohibits or limits the use of cryptoassets as a means of payment.
Finally, there are other currencies different from **Bitcoin**, the so-called *altcoins*, which with a good graphics card and the corresponding software, can be mined through the use of a personal computer.</div>
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## *Why can cryptocurrencies transactions be called more transparent?*
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All cryptocurrency transactions are carried out on the *blockchain*, and as described above, this technology of a decentralized nature can be qualified as a "shared ledger", where all transactions are recorded in blocks and where each block is a unit of information storage.
Each transaction, once approved through the consensus mechanism employed by each particular currency, is distributed throughout the system to be recorded at each node independently, and can be verified by all users.
In addition, these operations, once registered in the system, cannot be edited or altered in any way, which allows us to affirm that all transactions made with cryptocurrencies are reliable and secure.</div>
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## *Development of cryptocurrencies in Venezuela*</div>
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As a consequence of the erratic economic policies implemented by the Venezuelan government in the last two decades, the country is going through a voracious hyperinflationary process that has been going on for 41 months, in addition to 30 consecutive quarters of economic depression, which has not only caused an increase in unemployment to 58.4% of the economically active population, but has also completely destroyed the purchasing power of the national currency (VES), which has led Venezuelans to use foreign currencies, mainly US dollars, which represent more than 70% of the commercial operations in the country, and occasionally euros and other currencies of the region, not only as a method of payment to acquire goods and services, but also to preserve family savings from the hyperinflationary vortex.
In this context, the use of cryptoassets has become increasingly popular since 2013, reaching a volume of transactions exceeding US$303 million in 2019. Last year, despite the restrictions due to the Covid-19 pandemic, transactions for an amount of $246 million were reportedly carried out, mainly in **Bitcoin**, according to information provided by the exchange [Local Bitcoins](https://localbitcoins.com/es/)
In 2018, the national government by means of decrees published in Official Gazettes No. 6,370 and 6,371 of April of that year, creates a regulatory framework for the operation of cryptoassets in the country, and mainly for the issuance of the sovereign cryptocurrency **Petro** (PTR), amidst criticism and skepticism from investors for multiple reasons, including the fact that this official pseudo-currency would be backed by oil production and other mineral deposits located in the national territory, which is under the control of the State according to current legislation.
These decrees of the national executive, constitute the legal framework that regulates the creation, circulation, use and exchange of cryptoassets by natural or legal persons, belonging to the public or private sector, residents or not of Venezuela, and that count on the promotion, protection and guarantee of the Venezuelan State for their use as a means of payment in public institutions and private companies, mixed or joint, inside or outside the national territory.
For some years now, several commercial establishments have been accepting cryptocurrencies as a means of payment, mainly those dedicated to the sale of food, as is the case of *fast food* establishments, although probably the most significant example is **Simple TV**, a subscription television service with national presence.
In addition to the government cryptocurrency **Petro**, there are also at least 7 other cryptoassets originated in the country, to address the loss of value of the "legal tender" currency and facilitate the acquisition of goods and services, with **Bolivarcoin** (Boli) being the first to make its appearance on the scene in 2015. Created by a developer nicknamed **Satoshisimon Bolivarmoto**, it has its own *blockchain* that makes use of the X11 algorithm, just like **Dash**. It is minable, and the total amount of coins in circulation is 25 million units, and is available on the **Graviex** exchange.
Other developments include 2016's **Arepa Coin** (Arepa); **Onix Coin**, a project born in 2017 and reportedly abandoned in 2020; **Rilcoin** (RIL), created in 2018 by a team of eight people and employing the Scrypt algorithm; 2018's **AndesCoin**; **Dracma** (DRAC), a token running on the **Tron** (TRX) network that is targeted at devotees of Christianity and social works; and finally, **PerlaCoin**, a project devised in 2018 and aimed at promoting national tourism, and still under construction.
Despite the enthusiasm of its developers, none of these projects has been adopted on a massive scale, and even, they have not even managed to see themselves listed on **CoinMarketCap**.</div>
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## *Conclusions*
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+ Although cryptocurrencies and FIAT currencies serve the same functions as units of account, store of value and method of payment to acquire goods and services; they possess profoundly different in form, origin and operation.
+ The *blockchain* is a decentralized network that does not require the participation of third parties to operate.
+ Transactions made with cryptoassets are reliable, anonymous, immediate, auditable, irreversible and practically invulnerable to hacker attacks.
+ Cryptocurrency prices are highly sensitive to news, and particularly to attempts by various governments to partially or fully regulate this activity.
+ Cryptocurrency mining is a process that consists of solving complex mathematical operations, which requires devices with high computational power.
+ The deterioration of the purchasing power of the *Sovereign Bolivar* (VES), legal tender in Venezuela, has driven the massive adoption of cryptocurrencies as a payment and savings alternative in this country, even above other more developed economies.</div>
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### This is my Homework Post for **Steemit Crypto Academy Season 2 Week 6 || Learn about Cryptocurrency by Professor @levycore**</center>
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### If you liked this post, I invite you to support my work by following my account @manuelgil64 and leaving your comments and upvoting
#### Thanks!</center>