Steemit Crypto Academy Season Two Week Two: Tokens by Professor @pelon53.

The use of the word token is really great in the cryptocurrency space because new projects arise every day and tokens are created to serve as a source of backing in this crypto space mentioned but then we must admit that the use of token did not begin with cryptocurrency, the use of token digs way back to the early times when little settlements used it as a means of transactions between one another but with the presence of the blockchain, these token has become digitalized, smart contracts are now used in the creation of tokens in a transparent and simple way.

The use of token is now a wide spread idea on the blockchain and very soon this idea will also be spread to the physical financial system and tokens will become a drastic source of exchange with a good revolution in place to handle it.

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The difference between token and cryptocurrency.

The use of the word token and cryptocurrency should however not be confused for one another because they may be similar but they have their differences.
Tokens only functions based on existing blockchain such as Ethereum and Tron while cryptocurrency uses its own blockchain.
Tokens are usually created under smart contracts and there are reasons why tokens are created so the token simply fulfils that purpose alone and cryptocurrency is not programmed under smart contracts.
In order for a token to function, then it needs to work within a particular ecosystem but cryptocurrency has unlimited functions and does not need an ecosystem to perform.

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SECURITY TOKEN.

When a particular enterprise has a physical asset and wants the asset to get tied to the blockchain, it issues security token to represent it. Security tokens could be likened to stocks and bonds. Security tokens are issued during an ICO and it will be good for us to understand what an ICO means, an ICO is a concept for companies to raise funds and coins are tokens are issued to investors in return.

An example of a company that issues security tokens is Science tokens, science is a blockchain company that has invested in more than 70 companies, the holders of the SCI token are entitled to70 percent of the tokens from the subsequently invested companies.

UTILITY TOKEN.

Utility tokens give investors to right to operate within the ecosystem or product, when a utility token is issued the price of the token may either go upward or downward, the usage right of utility token is usually bound to the ecosystem to which it was offered.

An example of utility token is Siacoin, the Siacoin is the legal currency on Sia server where users pay for the ability to rent space and store hard drive, which provides a very great security feature.

EQUITY TOKENS.

Equity token holders usually have the right to have shares in the company and they also have the right to vote for the future of the company, as much as the ecosystem evolves, the investors have more to benefit when there is growth in the ecosystem.

An example of equity token is DAO (Decentralized Autonomous Organization), the organization makes use of blockchain technology and smart contracts to provide a great level of transparency and security. DAO provides investors with the opportunity of getting involved with the operations happening around the ecosystem.

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