Understanding Token || Crypto Academy Beginner's Course Homework Participation
Intro
In previous times, I was thinking that token and coin are the similar terms but now from the lecture of the professor @reminiscence01 it is clear that there is a huge difference between these two. Now, I am going to participate in the homework task and sharing the answer of four questions asked by crypto professor for the home work.
1) What do you understand by Token and give an example of at least 5 tokens and identify the blockchain it is built on. (give at least 3 different Blockchains)
Blockchain is an updated technology and for this technology we need a lot of coding and expertise on this field. When a blockchain come into existence it obviously should have a currency or something like that to finance that project or for that element will be work as a basic medium of financial exchange of that blockchain technology. So, financial indicator of a blockchain technology is must needed.
Token is basically a digital asset created on any existing blockchain network for doing any specific operations in the blockchain. Coin has to be initiated from the very early on the starting of the blockchain but token can be generated based on any existing blockchain easily. That the basic and core difference between these two.
A token is generated based on any blockchain basically the existing blockchain technology and there are huge number of such example of blockchain technology where new tokens has been created on the basis of smart contract. I am sharing couple of those here in the list below.
| Token | Blockchain |
|---|---|
| CAKE (Pancakeswap Token) | Binance Smart Chain |
| UNI (Uniswap) | Ethereum |
| BTT (BitTorrent) | Tron |
| KARMA | EOS |
| WIN (WINkLink) | Tron |
2) What is the difference between a token and a coin?
In my previous answer of the question, I have explained a basic difference between coin and token but still here in this answer section I am going to point out some of other differences between coin and token.
Coin can be e generated once during the initiation of the blockchain as it is the basic and core currency of the ecosystem. On the other hand, token can be created based on any blockchain technology anytime in the running of the blockchain network.
As new blockchain has not to be developed in case of token creation so it is easier compared with the coin generation.
In several exchanges, what we are normally trading are coins. Some blockchains tokens are also popular. But in case of popularity and adoption, coins can be found more in comparison with the tokens.
Coin is the basic currency that's why it will be used for any sort of transaction father in the blockchain network so it can be used for purchasing token but coin cannot be purchased by token.
3) Explain the different categories token listed below and explain its features
When it is matter of token then many things need to be clarified. There are several kinds of token in the currency world and those are used for many several purposes. According to their purposes, token can be categorized into following segments and I am explaining one by one below-
Utility token
When a new cryptocurrency project is initiated then it requires some fund and, in that case, token can be generated based on the blockchain demand and it can be offered in the form of ICO where investor will buy these tokens with some other existing cryptocurrencies. The funding will be done and the stake will be given to the investors on this token.
When the project will be successful then the price of the token will obviously be high and that investors will get much more benefit from that blockchain project. As this token will be traded with other cryptocurrencies and the investor will have some sort of control on the blockchain technology that's why it is termed so which means that will be used for utility purposes later on.
Equity token
It is just similar to the Stock of any company. In case of stock market or stock of company, we know some portion of the share has been offered to the mass people and in that way those group of people can be the part of that company by holding the share of that company. Here it is almost similar kind of concept but blockchain technology is backing the company or market that's why the transaction and the record is immutable and undestroyable. That's good and guarantee for the holders or investors. So, this kind of tokens are equity token.
Security token
In the form of Bond, stocks of any company can take some foreign currencies for exchanging or trading the token. When it is just based on blockchain network that we can treat as token and here the security and the potentiality of the token is much more strengthen with the help of blockchain network. Equity and debt are tokenized in the Digital form called token based on any blockchain technology or DeFi.
Non-fungible token (NFT)
This kind of tokens are not similar to the normal type of token. It is different in in terms of its size and split. Normal token can be traded or split into several segments of tokens for easing trading but it cannot be fragmented. It will be remaining at its same condition. For example, a music or any other form of digital assets can be tokenized as non-fungible token which will not splitable. That will be a unique token for that specific purpose.
4) 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)
CAKE on Pancakeswap
Pancakeswap is a specially designed defi (Decentralized Finance) application. We know it’s for liquidity purpose of the Binance Smart Chain. For exchanging token their needs some liquidity and the liquidity are provided by the holders by yield farming and in that way, they can earn the fees for supporting the liquidity pool. For that support they are offered token called CAKE. This system is called AMM (Automated Market Maker)
Launch Time of Pancakeswap is Sept/2020.
It is based on binary smart Chain and BEF20 tokens can be exchanged with it. Contribution to the liquidity pool is providing the token to the contributors in the form of fee collected from the transactions. In the network, depositor can deposit token but, in the return, they can only get this CAKE token form the earning for supporting the liquidity pool of transection.
This CAKE token can also can be used for purchasing lottery on pancakeswap. After a certain interval the lottery draws happening and in this way its holder can get some benefit from it. They can also get some non-fungible token which will be traded with cake letter on.
In the screenshot which I have taken from https://coinmarketcap.com you can see the price and many more related information about this token. Its price is huge and I have shared the trend of price of all time as well here in the screenshot part. I hope it will be easy understandable to know about that token.
Here is the Source of information of the fourth question answer.
Conclusion
It is a good opportunity for us to learn about blockchain, cryptocurrency and trading related topic through the initiative of SteemitCryptoAcdemy Lecture. I am thankful to Professor and all the initiators of the program.
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