Crypto Academy Season 3 Week 8 Beginner's Course Understanding Tokens Assignment by @lizzyd
It has been an awesome 8th season and special thanks to prod @remkniscence01 for the lecture " Understanding tokens
TOKENS
Tokens refer to special virtual currency, they show that assets can be fungible and traded on their own blockchains and are a subset of cryptocurrency,very useful for economic transactions. They can be be used interchangeably to raise crowd sales, Usually they are traded through an initial coin offering which involves the cryptocurrency version of the initial public offering (ipo).
Tokens can be used for various investment purposes, to trade, to safeguard value and make significant purchases. It greatly helps the sending and receiving of payments on the blockchain and helps raise funds for sales.
Examples of Tokens and the blockchain they are built on
| TOKEN | BLOCKCHAIN THEY ARE BUILT ON |
|---|---|
| Uniswap | Ethereum Blockchain |
| Everipedia | EOS |
| FTX token | Binance chain |
| Tether | Ethereum blockchain |
| Klever | Tron |
| Bankor( Bnt) | Ethereum blockchain |
| Basic attention token (B.a.t) | Ethereum blockchain |
Difference between between token and coins
| Coins | Tokens |
|---|---|
| Makes use of cryptography to perfect transactions in the blockchain | They are subsets of cryptocurrency built on other blockchins. |
| Consists of 2500 currencies and it's likely to increase in the coming years. | It represents a unit of value by a company embraced by a community and backed up by a blockchain. |
| Majorly used for transaction and exchange all over the globe. | It serves as business models for distributing rewards among the active participants. |
Utility Tokens
It is digital token of cryptocurrency that is issued to find growth of cryptocurrency and the best part is it can be used to purchase goods and services offered by the cryptocurrency issues. Usually, people buy tokens for future intentions, a typical example is when an Information technology company uses tokens to fund a software development, upon completion the owners can use it to supplement purchases. Tokens are very strong means with numerous uses especially for exchange of services, currency substitute to share rewards etc
Security Tokens
A security token is digital device that provides a two factor authentication to users to verify individual identity. It can be used as a form of security for digital assets in place of password and can also serves as signature for documents on the virtual space.
How it works
The tokens are generated by random number encrypted and sent to the user who then sends it back , the device peculiar to each user is reused which makes authentication seamless and not prone to hacking.
Types of security token
- One time passwords
- Disconnected tokens
- Connected tokens
- Programmable tokens
- Single sign-on (SSO) software tokens
Security Tokens generally add extra effort to secure digital assets.
Equity
Equity tokens represents traditional aspects of stock market where ownership of each token implies ownership of quota of the entire company. An equity is registered on the blockchain and enables the owners have a part in the company's profits and allows for the voting God the company's future.
It is operated both on public and private establishments. It also allows the maintenance of investors rights who participated in the blockchain network and also collects payments monthly depending on the development of cryptocurrency in the current year.
Non-fungible tokens
Non fungible tokens are digital assets that are unique and cannot be substituted for another. In most cases Nfts are digital assets like arts and music , all other ones are replica and cannot be the main item sold. It also includes items like writings, videos, poems, virtual lands, virtual cars etc
The major advantage of Nft is that it helps creatives protect their works and give them the due ownership that can't be pirated.
Utility payment in Addis Ababa
The Ethiopian authorities in 2019 announced that a utility token will be built for Ethiopia. The token covered payments for utilities like electricity instead of going to physical sites in the city. They believed it will help to save time in paying bills, discourage fraud and increase access to products an so, the minister requested for a digital solution bided by law.
Conclusion
Utility tokens are multidimensional , they allow easy flow of transaction unlike the security tokens which is purely for investments. The roles played are very vital.
Thanks prof @reminiscence01
Hello @lizzyd, I’m glad you participated in the 8th week of the Beginner’s class at the Steemit Crypto Academy. Your grades in this task are as follows:
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