Source: pixabay.com Modified by @emimoron

Source: pixabay.com Modified by @emimoron

Tokens are digital assets that are used in ecosystems as financial investment instruments, they are created within platforms and on a project basis. Tokens are intended to be used only within the platforms and can be exchanged for cryptocurrencies. The purpose of tokens is to be used within the platforms as a form of payment, generally their use is intended for decentralized platforms and their networks, in a more concentrated definition tokens are created as an instrument, a resource that can be from an incentive for a video game or to be used in application improvements whose companies allocate the tokens for the purchase of devices, updates and others.

Source: pixabay.com Modified by @emimoron

1.- They have no real value: In this case it should be explained that a token is not a currency in itself, it has no real value, hence its value is anchored to a project and a platform that supports it.

2.- They are created by private entities: This means that companies or individuals are in charge of their development and support of the transactions that are carried out in their function of their value, which is also defined by the oscillations of the shares that support them according to the company. The tokens in its oldest origin are created with very cheap and worthless materials, although we see images of shiny and golden tokens these are not really made of gold, silver or any other expensive material, even today and for more than 10 years tokens are cryptographic ie digital fingerprints that easy development and issuance.

3. Their development and use is anchored to a platform or ecosystem that controls and regulates how they are to be used and the type of transactions admitted by them.

4. With the emergence of blockchain technology, tokens are secure and cannot be forged due to their unique cryptographic code or fingerprint.

Source: pixabay.com Modified by @emimoron

The operation of tokens depends on two factors:

1.- A Blockchain and a cryptocurrency that allow its development: In this first point we must understand that the purpose of a token is to represent the value of something that exists in the real world, either from shares of companies, through companies and their products or particular ventures, in this case, the token requires an ecosystem that allows it to represent and operate that for which it was created.

2. A contract and programming that clearly establishes the operations that can be performed with these tokens: This second point refers to the programming tools with which the token is created and establishes the characteristics for its operations according to the blockchain where they work and the contract for which they were created. For example if a token is created using the Ethereum blockchain our token will be based on the smart contract and the Ethereum ERC-20 token standard.

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An example of these parameters can be verified in the following tokens:

Tether: which is a token that digitally represents the US dollar and runs on the Ethereum blockchain. This acts with a fixed value i.e. it is a stablishcoin, in this case its value is 1:1 with respect to the dollar and its purpose is to maintain a balance in the ecosystem and represent the US dollar. It was developed in 2014.

BNB: is an ERC-20 type token that also runs on the Ethereum blockchain this was launched in 2017 to finance the development of the Exchange. This additionally is used in games and DApps. It is estimated for the time of the task that there are around 141M of these in circulation in the ecosystem.

HEX: It is a token launched in 2019 from the Ethereum ecosystem of type ERC-20 this acts as a kind of reserve, because it was created to be the first certificate of deposit in the blockchain, this is a financial instrument as well as an incentive for those who keep their HEX invested.

CAKE (PancakeSwap): This is a BEP-20 token is native to the Binance Smart Chain (BSC) ecosystem and was created in 2020 its purpose is to grant liquidity to the PancakeSwap Platform.

XLM: Token of the Stellar Lumens Platform, a decentralized platform, its token is based on the SPC protocol. It is designed to be a fast transfer tool for any currency.

Source: pixabay.com

The difference between tokens and cryptocurrencies is defined in the first place by the real value that cryptocurrencies have, in this case they are considered financial instruments with which you can pay for products and services and are fully valid in the different markets of the world.

Cryptocurrencies have their own blockchain and do not depend on another ecosystem for their operations in this case it is a fully self-sustaining exchange system.

Tokens are created to be a representation of a real-world value, which makes them themselves worthless.

Tokens need the backing of cryptocurrencies and an ecosystem that allows them to execute their operations.

As can be seen, the difference is in the relationship of dependence of one on the other, while the token must necessarily be backed by a specific contract of a cryptocurrency and have an ecosystem to operate cryptocurrencies do not, they themselves are a value and a financial asset.

Source: pixabay.com Modified by @emimoron

Source: pixabay.com Modified by @emimoron

This, as its name suggests, is a utility token and allows its owners to access products and services that are provided by a private provider. These are not regulated, for some market scholars these are more of a promise than something tangible. These became famous in 2017 as they were used by different crypto projects during the era known as the ICO Boom what is an Initial Offering of Cryptocurrencies project. In this sense, tokens were created whose purpose was to finance a specific company, these tokens could later be used to access the products and services that these companies offered. Because they are not regulated these tokens have been used in ghost projects or scams, which made people no longer trust in their acquisition, however there were companies that achieved stability and demonstrated to customers that they could trust them but it was a small percentage.

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This is a type of token that is anchored to the security of a traditional financial instrument, understood as bonds, futures contracts, capitalized investment projects. These represent assets within the blockchain, their function is to give companies decentralized control of their assets, cost reduction, greater security and easier management.

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These are issued when a company needs to inject capital, in this case they represent the capital or shares of the company. These constitute a token or share of the company that issues them, these maintain an intrinsic value that is tied to the value of the company and its earnings, in this case the people who buy them are entitled to the profitability of the company.

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These tokens represent a unique asset, in this case they have the characteristic of being unique and unrepeatable. The metadata that describe them make each one of them a different asset that also does not allow division, in the world of cryptoassets they can be compared with a certificate of authenticity. They are rare due to the rarity and unique nature of their development. They are authentic and therefore contain a high level of protection against fraud.

4. Cake Token

It is a token that belongs to the PancakeSwap platform of type BEP-20, this is a design very similar to the EIP-20. It has the possibility of importing tokens from other platforms through the use of Binance Bridge and converting them into BEP-20 in order to use them within the decentralized Exchange.

Its technological protocol is based on DEX, i.e. an Automated Market Making (AMM) system, which is implemented as a mechanism through which users add liquidity to the Exchange, without losing ownership of their tokens. In this decentralized platform the Cake token eliminates the control books of buying and selling of the users, in this platform the tokens that we have available are published so that other users can lend or exchange them according to their investment purpose.

-Adds liquidity to the platform.

-It does not have a fixed number of tokens in the market.

-It has a controlled issuance mechanism in the block.

-Controlled burning of tokens, which reduces inflation.

-Encourages users to maintain liquidity in DEX.

-Borrowing: BSC tokens and LP tokens can be borrowed with the use of the Cake token as a backup.

-The Tracing Margin: Possibility to exchange of BSC with on-chain leverage, in addition to setting token burn periodically.

-Increase the importance of NFT characters with race, age and other parameters that have been linked to the Cake token.

-Exchange without intermediaries.

-Participate in bets, games and lotteries.

The project with the Cake token is defined as the Cake Farm where users will be able to have their token cake crop within the ecosystem. This project consists of users placing bets on the platform with their token in these bets users enter the lottery for a quota in the token farm. If you win the lottery you can start growing your own tokens.

Source: pixabay.com Modified by @emimoron

This week we have studied tokens from their conceptualization, characteristics, utility, ecosystems and future projects. We learned that a token is different from a cryptocurrency even though they are two instruments intended for exchanges on platforms, the token itself does not have a value, it represents a real world value that is obligatorily linked to a cryptocurrency and needs the ecosystem of this to be able to operate.

There are different tokens and these are characterized by the project they represent, the type of contract and platform on which they operate, whether they are decentralized platforms or not. One of my favorite tokens studied here is the Cake token because in the latest market research it is positioning itself as an instrument that not only provides liquidity to the ecosystem to which the PancakeSwap platform belongs but also allows the exchange with other tokens and can be used as an investment.

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