Steemit Academy Season 2, Week 2 Homework Task for @pelon53|| @blessingkasabe

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Dear Steemians,
I am very glad to take part in this week's lesson. I thank professor @pelon53 for teaching what tokens are, the different types, and other vital information on tokens.
After going through what he taught and doing my research, I have decided to present the homework.
Before I begin my submission, I want us to first look at what Tokens are for better understanding.

Tokens

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Token, which can also be called crypto-token, is a unique digital currency that has its blockchain. Token are fungible assets that can be changed and traded on the blockchain.
Tokens are used to substitute other things. These tokens are sold, distributed, and circulated through the blockchain when they are created.
Tokens use the standard initial coin offering (ICO) process to create, circulate, sell and distribute their assets; they can also fund project developments. Tokens use different encryption cryptographic and algorithm techniques to secure data; these data can be public or public keys, elliptical curve encryption, and hashing functions.

Cryptocurrencies use virtual tokens for online transactions on the blockchain network.
These Tokens often represent transaction units on the blockchain network; users can create tokens using standard templates such as the Ethereum network. Tokens on the blockchain use the concept of decentralized applications or smart contracts to work.

There are different forms of Tokens; some represent customers' loyalty points on the blockchain network, which can be used to manage the details for a retail chain. Tokens can also be given to people to watch videos for a particular number of hours on a video-sharing blockchain. Some represent other digital currencies in value; for example, a token can be worth 5BTC on some blockchain network. These types of tokens can be transferred, or you can also trade with them.

1.- What is Security Token? And explain an example.

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A security token, which is sometimes called digital security, is a unique digital representation of assets such as real estate, fixed income, equity, shares, investment, structural products commodities traded on the blockchain. These tokens are regulated and protected by governing bodies all around the world. These bodies tell how the tokens are exchanged, issued, and managed.

Security tokens use blockchain technology to automate many traditional cumbersome and highly manual processes. Security tokens use the speed and ease of blockchain and the strong legal protection of traditional securities to protect tokens.

How Security Tokens Work
Hackers cause nearly $400 billion in losses yearly. This makes it important for businesses and people to protect their assets.
People normally use passwords and their credentials as security to protect their assets. This still gives hackers the means to hack into people's assets and steal them. This happens if they can memorize the security credentials of the person.
Digital security tokens use both credentials and a physical tool to give people access to their assets. Even if someone can memorize the key without having the tool, they still cannot access the asset since they do not have access to the tool.

Advantages and Disadvantages of security tokens
Security tokens offer many benefits and also has some disadvantages, which are discussed below,

Advantages

• Efficiency: The speed and transparency of blockchain automation have made it easier to create, issue, and transfer tokens faster and cheaper. Unlike the traditional method of transactions, which usually involves an intensive process, it is very costly. It involves many errors, but security tokens have made it more efficient to transact with low cost and less error.

• Transparency: Any security token trading can be monitored and recorded for all the parties to access any time they want. This minimizes disputes when it comes to record-keeping.

Disadvantages

• Investor Accreditation Limitations: One of the major problems of security tokens is that non-accredited investors can not own them. Most times, more STOs as part of their SEC compliance will be needed for an accredited investor.
  This normally requires an investor to make at least $200,000 per year or have at least 1 million dollars in his bank account.

• Secondary Market Trading Restrictions: security token investors are restricted from secondary trading markets. Security tokens are only transferable through licensed platforms, and the platforms must have a security trading license in their operation country in which they operate.

Bcap (Blockchain Capital) as an example of security token

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Bcaptoken was launched in 2017 by Blockchain Capital. Bcap is the first security token in the blockchain industry; it serves as the indirect economic interest in the digital token investment fund.
Bcap holders get the opportunity to get exposure to the assets of the fund.

BCAP token holders can do trading using their tokens on any secondary trading platforms to comply with the standard security regulations; this gives the token holders the chance to venture into the early stage of capital asset and benefit from any opportunity liquidity of the assets.

BCap raised $10M back in April 2017, with each token costing $1.00. As of December 2020, the cost of each token was $6.33
The BCAP portfolio has risen to 532.9% since its launch in April 2017 and has an IRR net of 64.0%.

2.- What is Utility Token? and explain an example.

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A utility token is a special digital token that has been created to capitalize or finance cryptocurrency projects. Utility tokens are used as a safeguard for taking part in mass sales of capital on a startup project; this allows users to have access to the products and services of the company in the future. These utility tokens are not seen as investments since most countries do not have standard regulations regarding these tokens.

Companies use utility tokens to create a coupon for their users that can be exchanged to access the company's services in the future. This is normally a strategy used to get capital for a project. Because of the promise the companies offer, utility tokens are often hyped to gain more attention.

In cryptocurrencies and the blockchain ecosystem, utility tokens are often associated with under-development projects. Companies use ICOs to raise funds for a cryptocurrency project. ICOs give out cryptocurrencies or tokens to their customers in exchange for digital currencies or fiat coins used for the final development.

Advantages and Disadvantages of utility tokens
Advantages

• There is an effective exchange on trade which also depends on the law of free-market activity.

• With utility tokens, there are no currency and equity. Meaning there is no established control around them.

Disadvantages

*. Utility tokens do not normally have securities, which do not guarantee a future profit in the project.

*. Utility tokens are normally new and usually do not have established regulations. This can easily lead to fraud and scam

Basic Attention Token (BAT) as an example of Utility Token

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BAT is an Ethereum-based cryptocurrency that focuses on rewarding content publishers and creators. The company behind BAT introduced this token to form a blockchain network that will help content creators to make money decently.
Users are rewarded using the BAT, which advertising fee is deducted from their earnings.
Basic Attention Token manages to bring about an advertising forum that is both decentralized and transparent; this benefits both customers and clients.

BAT team also developed The Brave Browser to connects content creators, advertisers, and users in a way that is beneficial to all of them. The Basic Attention Token is the reward token that provides better income for publishers.
BAT value has been raised since its integration into the Brave browser. It has 25.4 million monthly active users, of which 9.2 million are daily active users, and has 1 million verified creators accepting BA.

3.- What is Equity Token? and explain an example.

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An equity token is a type of digital security token that denotes equity in an underlying asset. This normally has to do with the stock of the business company. The terms and conditions and normally made available in the contract.
An equity token may give its holder the power to vote on business issues, have dividends, or be entitled to both. Rights such as Subscription rights and appraisal rights may also be included in contracts with the share certificates.

Equity tokens can affect directly or indirectly underlying assets; tokens are given to investors during initial coin offerings (ICOs). The tokens ICO offers are typically utility tokens needed to have access to company products and services.

Advantages and Disadvantages of Equity tokens

Advantages

• The funds raised are committed to intended development projects. Investors can only gain if the business is doing well, e.g., through stock market flotation or a sale of tokens to new investors.

• Investors help to expand the value of the business by investing in the business. Since the investors want to profit from the project, they are willing to expand the project.

Disadvantages

• Equity tokens are normally costly, demanding, and time-consuming. This sometimes makes management focus away from the core business activities.

• There is a potential conflict between investors and management. This normally happens due to the differences in management style, management's vision for the company.

Neufund As An Example Of An Equity Token

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NEU token is a blockchain-based platform that is focused on fundraising and also tokenizes assets. The NEU uses the Ethereum cryptocurrency blockchain, which uses smart contracts to achieve equity and fair conditions in its contract.

Any company can tokenize its assets and also bring in more investors issue tokens to attract additional investments. Tokens produced by companies will be called Neufund Equity Token Offering or ETO. In turn, ETO is a hybrid investment model combining the advantages of ICO, IPO, and Venture Capital. Because of this, ETO is the ideal option for creating an ecosystem around a company or product.

Conclusion
In conclusion, cryptocurrency and blockchain technology are the future of the world. The old method of doing business will be replaced by blockchain and digital tokens.
All the different types of tokens have their advantages and disadvantages, and it is up to you to choose carefully which one is best for you.

Thank you for reading