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TOC o “1-3” h z u Introduction PAGEREF _Toc522104327 h 1Question PAGEREF _Toc522104328 h 21.1.Characteristics of cryptocurrency and how do they differ from the traditional notes and coins? PAGEREF _Toc522104329 h 2a)Characteristics of cryptocurrency PAGEREF _Toc522104330 h 3b)Difference between Traditional notes and coins and Cryptocurrency PAGEREF _Toc522104331 h 31.2.Advantages and disadvantages of using cryptocurrencies PAGEREF _Toc522104332 h 4Advantages of cryptocurrency PAGEREF _Toc522104333 h 4Disadvantages of cryptocurrency PAGEREF _Toc522104334 h 61.3.Civic currencies PAGEREF _Toc522104335 h 71.4. Rationale of using civic currencies and uses of civic currencies PAGEREF _Toc522104336 h 8Uses of civic currencies PAGEREF _Toc522104337 h 91.5. PAGEREF _Toc522104338 h 9Duties PAGEREF _Toc522104339 h 9Conclusion PAGEREF _Toc522104340 h 11
IntroductionBitcoin, the world’s most normal and surely understood cryptographic money, has been expanding in popularity. It has a basic structure as it did when made in 2008, however, reuses cases of the world market changing have made another interest for digital forms of money significantly more noteworthy than its underlying appearing. By utilizing a cryptographic money, clients can trade esteem carefully without outsider oversight. Digital currency takes a shot at the suggestion of undoing encryption calculations to make extraordinary confusions that are limited in number. Joined with a system of computers checking exchanges, clients can trade cryptocurrency as though trading physical money. There is a limited number of bitcoins that will ever be produced, keeping an excess and guaranteeing its irregularity.

QuestionCharacteristics of cryptocurrency and how do they differ from the traditional notes and coins?According to Okhuese (2017), “A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency”. Cryptography or often referred to Cryptology, is the study of securing information or communication between the sender and the receiver, without the inconvenience of having a third party looking into the contents being shared. In general, cryptocurrency is currency used to complete transaction without having a ‘middle-man’ to facilitate the transactions.
Characteristics of cryptocurrencyVolatility – Cryptocurrencies are still relatively new compared to fiat currencies (Bitcoin was created in 2009), so there is still lack of sufficient knowledge about them. As a result, their prices are often affected by bad press. For example, according to a Forbes report, when a major Bitcoin exchange was hacked in 2014, Bitcoin price fell by about 23%.
Security – Most cryptocurrencies use wallets, which is a computer software that stores addresses for receiving new units of the currencies and secret keys for approving transactions that transfer the currencies to other parties. For most cryptocurrencies, your funds are as safe as you keep your wallet. Wallets kept online with cryptocurrency exchanges tend to be prime targets for hackers, so this practice should be avoided as much as possible.

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Decentralized – A lot of the cryptocurrencies available today are built on the block-chain technology introduced by Bitcoin. This means that they are decentralized and run on several computers worldwide. They are not owned or controlled by any organization or government. They can only go out of use if they do not offer enough value to make them publicly acceptable.

Mining – Mining is the process where the transactions in a cryptocurrency are committed to the block-chain and new units of the currency are created. Most cryptocurrencies use a “proof-of-work” system for mining. This is a system where difficult computational problem must be solved to win the right to mine new coins, but once the problem is solved, it can be easily validated.

Transactions cannot be changed – Once the exchanges have been written to the general population record and confirmed by different hubs on the system, it becomes hard to adjust the exchange as more blocks are written to the chain.

User Anonymity – The design of the block-chain that most cryptocurrencies use ensures that the identities of users are protected. The user identity is never written to the block-chain.
Difference between Traditional notes and coins and CryptocurrencyTraditional notes and coins, also referred to as Fiat Money, is regulated by the traditional banking system. The banking system is available to control of figures, trade rates, and changing by high profile bankers and governments, and because of the straightforwardness at which customary cash is printed gradually loses its esteem. Many banks work rely ‘reserve banks’, where they just have a supply of money at any one time for a specific level of clients without a moment’s delay, if all clients tried to pull back their cash on the double, the bank would come up short.

Cryptographic currencies was made to take care of the issue that banks can be controlled by governments and financiers alike, and furthermore to give individuals flexibility of protection in their exchanges, although all exchanges are open on the record, sending and receiving addresses are kept private and new ones make use of for various exchanges a specific level of security can be normal.
Both fiat money and digital money can be called cash or money, both are mediums of trade that are utilized to store and exchange esteem, both can be utilized to buys merchandise and enterprises, both have their esteem represented by supply, request, work, shortage, and other monetary components, both have their esteem influenced by the nature of the framework encompassing it, both can be exchanged on trades, and so forth.

Advantages and disadvantages of using cryptocurrenciesAdvantages of cryptocurrencyEasy access – Cryptocurrency is readily available to the general public. Nearly anybody can make use of cryptocurrency. It is a decentralized transaction and speculators from everywhere throughout the world have simple access to them. You can discover different activities trying to raise finances through digital money. Nearly anybody that can make online store transfers can turn out to be a part of markets.

Easy and efficiency with payments – Making payments using cryptocurrency is very easy.  You can do it in just a matter of a few seconds. It is very fast because you don’t require to feed many details, you don’t even need to enter your credit/debit card details.
Lower Fees – transactions involving money by using any other online medium or banks is expensive as they tax or charge considerable fees for the transaction. With cryptocurrency as the costs are very low or even costing nothing.
Private–. No information is required to share with the government and the bank regarding the deal. It is truly decentralized.

Highly secured – It is impossible for any individual other than the owner of the wallet to make any payment from the wallet.

Remain anonymous – Some coins can help you stay anonymous but contrary to popular belief, not all of them can. Bitcoin is pseudonymous which means people won’t know exactly who you are on the block chain but they can get some information from it.

No chargebacks – Once you made the payment, you cannot chargeback. This considerably depletes the chances of a fraud. Once the transfer has completed, it cannot reverse. Nobody can file chargeback like you can on credit cards. It has its cons but can be a benefit also.

No third party – You are the master of your money. You can keep it in your wallet and use it as per your wishes. There is no third party involved like a bank on whom you need to trust.

Disadvantages of cryptocurrencyDifficult to understand – Cryptocurrencies are relatively new and come with a learning curve. People end up investing without proper knowledge and lose money to something they did not learn about.

Lack of knowledge – People are not aware of how to use cryptocurrency and hence open themselves to hacker. The technology is somewhat complex and therefore one needs to be mindful of it before investing.

Not accepted widely – Not many websites and companies accept digital currencies yet. Very few countries have legalized the use of cryptocurrencies. It makes it impractical for everyday use. Due to lack of acceptance, before buying or investing online or offline, you need to make sure that it’s accepted at that place where you want to use it. Although it is slowly getting the acceptance around the world, it will take time to take the idea entirely out of the shadows. While popular cryptocurrency such as bitcoin is currently being used in different ways, there is still a long way to go for it to be used for commerce, international bank transfers as well as electronic payments. For cryptocurrency to get to this level, smart and scalable applications will need to be built for handling the wide scale of money transfer as well as micropayment services. With Request Network is waiting to launch the miannet, adoption isn’t too far away.

Can lose your wallet – There is a possibility of losing your wallet. If you have stored the money in the form of digital currency on your phone or computer, you better remember your password and not lose those devices. Losing your coins means you won’t be able to retrieve it, even with the help of legal assistance so that is just one of Bitcoins flaws.

No way to reverse the payment – If you mistakenly pay someone by using cryptocurrency, then there is no way to get a refund of the amount paid. All you can do is to ask the person for a refund and if your request is turned down, then just forget about the money.

Uncertainty & Volatility – Since cryptocurrencies are so new, they are also very volatile. This is one of the main reasons mass adoption is taking longer than it should. Many corporations don’t want to deal with a form of money that is going to go through huge swings in volatility.

Scaling – Based on the way smart contracts are designed, there is a limit to the speed and number of transactions it can process at a time which has hindered the widespread adoption of digital currencies. With the introduction of Lightning Networks, the crypto community has put a foot in the right direction which gives breathes hope into the idea that cryptocurrency could one day replace conventional credit card 
Civic currenciesCivic currencies (CVC), also known as “complementary currencies” or “social currencies” refers to digitized, decentralized currencies of all cryptocurrencies. These civic currencies are monitored by a block chain which is a public ledger of all cryptocurrency transactions. These currencies are digital currencies which are not backed up by a central government or bank. The supply of these currencies is controlled by an algorithm which enables users not to pay tax unless it is a requirement to do so.

Below is a table listing some of the top civic currencies with their names, symbol an description.

Name Symbol Description
Bitcoin BTC Digital gold
Ethereum ETH Programmable contracts and money
Bitcoin Cash BCH Bitcoin clone
Ripple XRP Enterprise payment settlement network
Litecoin LTC Faster Bitcoin
Dash DASH Privacy-focused Bitcoin clone
NEO NEO Chinese-market Ethereum
NEM XEM Batteries-included digital assets
Monero XMR Private digital cash
Ethereum Classic ETC Ethereum clone
IOTA MIOTA Internet-of-things payments
Qtum QTUM Ethereum contracts on Bitcoin
OmiseGO OMG Banking, remittance, and exchange

A clear description of the two top currencies is given below:
Bitcoin – was founded in 2009 by inventor Satoshi Nakamoto and was meant to be an alternative to the traditional banking system. This meant that the ‘middle man’ which is seen as ledgers such as Reserve Banks, PayPal and other traditional banking systems would be replaced by system that is decentralized.
Ethereum – was found soon after Bitcoin, was announced early in 2014 by founder Vitalik Buterin. Etheruem is an open-source, decentralized software platform that enables SmartContracts and Distributed Applications (?Apps). Ether is used generally for two purposes, it is traded as a digital currency exchange like other cryptocurrencies and is used inside Ethereum to run applications.

1.4. Rationale of using civic currencies and uses of civic currenciesThe reasons or logic of using civic currencies is better listed with some of the advantages which gives reasons to using civic currencies.–Cryptocurrency is readily available to the general public. Almost anyone can make use of it. It is a decentralized operation and investors from all over the world have easy access to them. Making payments using cryptocurrency is very easy.  You can do it in just a matter of a few seconds. It is very fast because you don’t require to feed many details, you don’t even need to enter your credit/debit card details. All you need is the address of the wallet of the person or enterprise to whom you wish to make the payment to.

With cryptocurrencies, you don’t need to wait a couple days for your business to receive the money. Due to the technology cryptocurrencies are based on, the block chain, it removes delays, payment of fees and a host of other third party approval that might have been present.
Transferring money by using any other online forum or bank gateway is expensive as they levy considerable fees for the transaction. Credit card processing companies. You don’t need to share your identity or whereabouts or the details of the transactions made between you and the beneficiary. No information is required to share with the government and the bank regarding the deal. It is truly decentralized. All your transactions will be secure. It is impossible for any person other than the owner of the wallet to make any payment from the wallet, unless they were hacked which there many ways to protect yourself from are.

Uses of civic currenciesLow-cost money transfers – The most well-known benefit of cryptocurrencies is their ability to send and receive payments at a low cost and at a high speed.

Make private transactions –  Individuals can make money transfers without having to explain to a bank why they are sending a large sum of money, what the sources of the funds are and who they are sending it to, which can delay the transaction and involve unnecessarily governmental processes.

Travel the world – it is now possible to travel the world by spending cryptocurrency. The growth of the bitcoin ATM market also means travellers are now able to convert their cryptocurrency into local currency in most major cities around the world.

Investing – with civic currencies an individual with an Internet connection to become an investor in innovative early-stage tech start-ups, while at the same time providing new start-up ventures with much-needed seed capital.

Spending – individuals can spend a large amount of money on goods or services and still not get a heavy tax on what they have spent on.
1.5. Duties of South African Reserve Bank
Establishment of Liquidity to Banks
The Reserve Bank provides liquidity to banks during periods of temporary shortages of cash. This role is referred to as the Bank’s “lender-of-last-resort lending activities”.This function implies giving assistance to a bank facing liquidity problems. Such assistance is only given after a full analysis of the problems afflicting such a bank and the reasons they arose. A bankrupt bank will often not be able to repay its depositors, and the main purpose of special assistance is therefore to protect depositors. 
Banknotes and Coin
The Reserve Bank has the sole right to make, issue and destroy banknotes and coin in South Africa. The SA Mint Company, a subsidiary of the Bank, mints all the coins on behalf of the Reserve Bank. The SA Bank Note Company, another subsidiary of the Bank, prints all banknotes on behalf of the Bank.The Reserve Bank is responsible for the general distribution of banknotes and coin, whereas banks distribute banknotes and coin to their branch offices to ensure availability to the public. The branches of the Bank, the South African Police Service and the commercial banks also work together to combat the faking of banknotes.

Banker of other Banks
The Reserve Bank acts as keeper of the cash funds that banks are legally required to hold as well as those they prefer to hold voluntarily with the Bank. The Bank has the authority to change the minimum cash reserves that banks are required to hold and can use such adjustments to influence bank liquidity and the amount of money in circulation.

Bank Supervision
The Reserve Bank is responsible for bank regulation and supervision in South Africa. The purpose is to achieve a sound, efficient banking system in the interest of the depositors of banks and the economy as a whole. 
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