Steemit Crypto Academy Season 3 Week 8 - Homework Task for @reminiscence01 | Understanding Tokens
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Hello everyone, I hope you're all doing fine. The same goes for me.
In this post, I'll be posting a homework task for crypto professor @reminiscence01
As you can get the idea from the title, the homework will be based on Tokens as it is crucial and elementary for a trader to know. We'll talk about what actually a token is. And what's a coin and how they're both different from each other. We'll see the examples of tokens and the blockchains that they're built.
I'll explain these tokens, their uses and examples, and many other sources using fully referenced and markdown images from various sources present on the internet. In any case of problems and issues, you can also reach out to me in the comment section.
What do you understand by Token and give an example of at least five tokens and identify the blockchain it is built on. ( give at least three different Blockchains)
These are the digital crypto assets that are designed for a platform. The platform will run on these tokens as the tokens provide a mode of transaction or digital payment to the investors and buyers. To perform a task, the user on that platform has to use that token. So, basically, the token is a digital mode of payment using a crypto asset in a transaction on a specific platform.
Tokens differ accordingly to their respective platforms. Different platforms have different tokens having different values and transaction limits. Also, tokens are parts that are integrated into the blockchain frameworks. They also represent ownership, investment, market growth and many other functions.
Tokens works on blockchain technology, to be very precise, "preexisting blockchains". The concept of integrating and running them on pre-existing blockchains is because, as a new asset under development, it is challenging for the developers to create a new blockchain from scratch for their token.
The creation of a new blockchain takes a considerable amount of time and effort. Also, it is very costly. To avoid these circumstances, companies use pre-existing Blockchains and validate their tokens with them.
Tokens are created by the organisations and dispersed through ICO events. ICO events are fundraising events through which funds are raised by selling tokens to the investors.
In old times, tokens were made and issued by private companies and organisations, due to which the falsification of that token was very easy. Still, as Bitcoin hit the market, it revolutionised the old systems by introducing blockchain technology, leading them to create digital tokens on blockchains.
Tokens are first invented and launched on the Etherium blockchain. The first tokens of their kind were named "ERC-20" and "Mastercoin".
Both of the tokens runs on the Etherium blockchain network.
Mastercoin's ICO was held in 2013, and in just a year, Etherium raised funds in token sales to $2.3 million just after 12 hours of going live in the market.
There are four basic types of tokens :
Utility Tokens
Security Tokens
Equity Tokens
Non-Fungible Tokens(NFT)
I'll be explaining these tokens in-depth with examples in this post later.
Dai - Etherium blockchain
COMP - Etherium blockchain
POLYMATH - Etherium blockchain
LINK - Etherium blockchain
Tether - Etherium blockchain
USD coin - Etherium blockchain
Uniswap - Etherium blockchain
karma - EOS
Everipedia - EOS
FTX - Binance chain
Thor Chain - Binance chain
BitTorrent - Tron
WINkLink - Tron
Bakery Token - Binance Smart Chain
Folgory coin - Bonance Smart Chain and many more.
You can view the tokens using the website coinmarketcap as it shows a large number of tokens in its all tokens menu.
You have to select tokens from the menu, and it'll show you the top trending tokens with their respective ranks, prices, volume and blockchain platforms.
Image showing All Tokens from Coinmarketcap
What is the difference between a token and a coin?
To answer this question, first, we need to know what a coin is? And then, we can compare it to the token that I've explained above.
These are the crypto assets that allow investors and buyers to make payments and transactions using digital currencies. Coins hold and can store value and can be used in trading. Also, they're legal to be used as a form of currency.
Coins also use blockchain technology to exist, but unlike tokens which are created on pre-existing blockchains, coins have their native blockchain networks, or we can say that they are independent of other blockchain networks. These are difficult to create as new blockchains are required to create them, and the creation of a new blockchain from scratch is very challenging.
Coins can be used in trading by a sanctioned value depending on current market conditions. Also, it can be traded or can be exchanged for another token or coin that belongs to another network blockchain.
Now we've known about coins and tokens. We can compare both and them and tell the difference between them.
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Coins and tokens both are crypto-assets, and both are somehow connected to Blockchain technology and hold trading value. These similarities lead to misinterpretation between these two terms.
There's a list of differences between these two terms:
coins are the native assets of a Blockchain, whereas tokens don't have their own Blockchain. They're formed over pre-existing Blockchains.
coins do not perform multiple roles. They're created to hold a value and to be used as a form of digital currencies. On the other hand, tokens serve multiple functions like representing ownership, investment and market growth etc.
As coins act as currencies, they can be used to buy other crypto or digital assets, including tokens, but the same is not valid with the tokens. We cannot use tokens to buy coins as tokens are bound to a specific platform and work as a part of leading body blockchains constructed for coins.
Coins take A massive amount of time and effort to create as they require a new blockchain network to work upon. On the other hand, tokens make a host of pre-existing blockchains and work on them.
There's a list of events that should be done to create a coin properly. For example: finalising consensus mechanisms, blockchain formation, nodes development, API Integration and many other complex steps.- Coins are created and distributed through mathematical mining systems, which take a lot of energy resources. On the other hand, the token creation and distribution methods are very simple. Tokens are created on existing blockchains and distributed using ICO events.
some examples of crypto coins are as follows: Bitcoin, Etherium, Cardano, XRP, litecoin, Dogecoin etc.
some examples of the tokens are as follows: Tether, Uniswap, Chainlink, Aave, Axie, Holo, Celsius etc.
Explain the different categories token listed and explain their features
There are four basic types of tokens :
Security Tokens
Utility Tokens
Equity Tokens
Non-Fungible Tokens(NFT)
From this point onwards, I'll explain every one of these tokens with details and examples.
These are the type of tokens representing the ownership, or we can say it shows the stake of a stakeholder In a particular crypto asset. The holders of these shares extract profits from the crypto assets.
Security tokens are issued by organisations that can be private and government bodies. They serve as the connective links between Traditional Assets and digital Tokens.
These are offered through the events called STO(Security token offering) events. These are similar to ICO(Initial coin offering) events, but a stake of ownership is offered to the investor rather than a coin. And it raises funds and works similar to ICO events.
An example of a security token is POLYMATH(POLY). It is an Etherium chain based Decentralized project that was created to manage other security tokens.
At the time of making this post, the current details of the polymath security token are as follows:
Image showing polymath from Coinmarketcap
Token name - polymath(POLY)
Type - Security token
RANK - 195
Price - $ 0.2961
Market cap - $ 183,879,532
24-hour volume - $ 13,003,438
Circulating supply - 621,061,480.54 POLY
Volume / market cap - 0.7107
Utility tokens are created by organisations under some specific conditions, and before the ICO events, they apply some terms and conditions on the tokes that the investors should follow.
These are the tokens that are created to perform specific functions in a system or a platform. The functions can be different from being used as a reward token to be a mode of payment.
these type of tokens which use ICO events to raise funds and the investors have the rights to make an impression over the authority decisions.
An example of a utility token is BAT(Basic Attention Token), an Etherium chain-based utility token. This provides users of a certain web browser named Brave Browser with BAT tokens that can be used under the browser's environment. It gives rewards to the users to view ads and videos according to the user's interest.
At the time of making this post, the current details of the Basic Attention token are as follows:
Image showing Basic Attention Token from Coinmarketcap
Token name - Basic Attention Token
Type - Utility token
RANK - 84
Price - $ 0.7439
Market cap - $ 1067946366
24-hour volume - $ 295,104,757
Circulating supply - 1.49B BAT
Volume / market cap - 0.2218
These are the tokens by which an investor can claim and show his crypto asset ownership. It is very similar to the security tokens, which consists of a documentary. The only difference is that these have some digital documents, which are present in Digital Certificates.
These just work similar to the stock market. The only difference Is that they work on blockchain networks.
these tokens are offered to the investors by (ETO)Equity Token Offering events. The concept of ETO is just similar to any other mode of offering and, I.e. raising funds and promote the new project.
Investors of the Equity tokens have voting rights provided by the organisations with the tokens. The fund invested by an inverter can be withdrawn at the cost of decrement in his authority and voting rights.
An example of an equity token is ATLANT(ATL). It is an Etherium Chain based token that was launched in 2017 On ERC-20 standards. It deals with real estate demanding by providing apartments at the lowest price based on people's reviews worldwide.
At the time of making this post, the current details of the ATLANT token are as follows:
Image showing ATLANT from Coinmarketcap
Token name - ATLANT
Type - Equity token
RANK - 1755
Price - $ 0.0164
Market cap - $ 906916
Circulating supply - 54175040.68 ATL
- It is a type of digital crypto asset that contains a record of ownership status. The status and details will be recorded on blockchains and their respective networks.
It can be a document, audio, video and any other documentary item. Anyone can view the items on a blockchain as they're transparent in nature, but only the owner of the asset of the NFT token will be able to make amends to it.
As these are tokens, they follow the token characteristics and are formed on the Etherium blockchain.
NFT is a token type, hence a digital crypto-asset, but it cannot be used or exchanged to buy another asset as it stores data.
- An Example of NFT(Non-Fungible Token) is "knownOrigin".It is a platform that Allows Artists to market and sell their stock digital Artwork and other rare Arts. As an NFT, it uses the Etherium blockchain. It converts the artwork into tokens and registers it on the website of Knownorigin. Later that digital asset will be marketed, and the profit will be shared among the platform and the artists.
Image showing NFT from Coinmarketcap
-At the time of making this post, the current details of the ATLANT token are as follows:
Token name - Basic Attention Token
Type - NFT token
RANK - 1085
Price - $ 0.1818
Market cap - $ 6703028
24-hour volume - $ 148444
Circulating supply - 34863404.00 NFT
Volume / market cap - 0.02234
Image showing KnownOrigin Website
Make your own research and write extensively on any token you listed in question one. (Must include features of the token, the aim of the project, Use cases)
I'll be explaining uniswap as I've worked on this token before and have a basic understanding of its concept and working mechanism.
It is a token that is built on the Etherium blockchain created by Hayden Adams in 2017. The idea of creating this platform was first proposed in the year 2016 by Vitali Buterin. They wanted to create a platform that can process decentralized operations.
The token which is used on the platform is called the Uniswap token or UNI. As a token, it works on the Etherium blockchain and has ERC-20 standards.
As uniswap was built to convert illiquid and highly spread assets to order-book exchanges, it is formed under two smart contracts. The first one was the Exchange contract and the Second one was the Factory Contract.
The Exchange Contracts were used to swap tokens. On the other hand, Factory contracts are used to introduce new tokens in the market using the same Etherium blockchain network.
- The Uniswap platform aims to create liquidity and ensure that the other platforms are not facing liquidity issues. It automates the market making, which results in limiting risk and reducing costs for investors. As it is a decentralized protocol, anyone can make liquidity pools for any selected pair or tokens.
Uniswap is an Etherium blockchain-based Decentralized asset that follows ERC-20 Standards.
It has two major functions by which it can be used to promote new tokens or transfer exchange existing ones.
It works on a system called AMM(Automated Market Maker), which is a decentralized protocol that eliminates the centralized trading options by relying on smart contracts.
the trades done on the Uniswap were performed through Automated liquidity pools.
Every crypto asset which is supported by the uniswap contains its own pool and an algorithm that sets the prices for them.
Image showing Uniswap from Coinmarketcap
The Current Values and market conditions of Uniswap are as follows:
Token name - Uniswap Token
Type - Etherium Based
RANK - 11
Price - $ 28.73
Market cap - $ 16878616538
24-hour volume - $ 427636190
Circulating supply - 587458594.60 UNI
Volume / market cap - 0.02536
Image showing Price chart from Coinmarketcap
Uniswap can be exchanged with many tokens easily. The following image shows some of the swap menu options :
Image Showing Exchanges for Uniswap From Coinmarketcap
In this world of digital crypto Assets, a trader needs to know the difference between the assets and their respective functions. I've learned from this lecture a lot about tokens and coins. Tokens works on preexisting blockchains and show great potential for the development of a firm. These tokens represent the ownerships and hold values, and can perform multiple functions. Tokens give an upper hand to the investors by providing decision-making rights from their ownership of an asset. The tokens bring revolutionary changes to the crypto society and will surely promote development.
Although risk analytics is critical in the crypto market, one should understand what the assets are and how they work and what can be done to gain maximum profits from them. And how they're different from each other. Every asset has it's high and low, but the investor should be patient. And then, a trader should make investment decisions.
Being able to gather such knowledge, I am truly blessed and wanted to thank professor @reminiscence01 to deliver such an amazing task.
That'll be all from my side.
Thank you for reading
@reminiscene01
You've got a free upvote from witness fuli.
Peace & Love!
Hello @ashucypher , 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:
You have done a great work by making a wonderful research on tokens. Thank you for completing your homework task.
Thank you professor.
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