Steemit Crypto Academy Season 3: Homework Task for@reminiscence01|| Submitted by @goodspeed22|| 20/08/2021

Hello friends, good evening. Glad to be here this week. Below is my Homework Task for this week.

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"Question 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)"

Simply put, token is a cryptocurrency or virtual asset that is made from already-existing blockchain and can be used for trading. That is, holders of this asset will be able to exchange it with other virtual asset for profit making or investment. This (token) must be accepted by a community and supported by a blockchain. Thus, it represents holders interest in the company or a developing project.

Token can be used by a startup project to raise fund for their project that has not been delivered yet without going to the investors. This process is carried out through Initial Coin Offering (ICO), whereby the company gives out their native currency in order for the public to receive this token. Anyone can take part without the need for special credentials and because it is decentralized, it is open for everyone to view and verify the transaction being done.

Five Examples of Token

• LINK is built on Ethereum blockchain.
• REEF is built on PolkaDot blockchain.
• STEEM is built on Steem blockchain.
• TRONIX (TRX) is built on Tron blockchain.
• Satoshi is built on Bitcoin blockchain.

"Question 2: What is the difference between a token and a coin?"

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A Token

A token refers to digital asset that is created based on another blockchain that is already built. This is done to save cost by the developers. It can be exchanged for other virtual assets on different exchanges and also used for various purposes other than making payment for goods and services. It is given out to the public through Initial Coin Offering (ICO), which is used as a crowdfunding for the project, thereby bypassing intermediaries. Thus, holders as well are rewarded for using this token as it gives them certain right to the decision-making of the project.

A Coin

This refers to cryptocurrency that is created based on its own separate blockchain, that is, they are powered by its own native blockchain network. It is used in making payments like ordinary currency, it stores value, which is based on demand and supply of the asset. This makes coin to most times be unstable or varies. The blockchain can come in various sizes, rules, miners, performance and can only be distributed by mining. Examples of this coin are Bitcoin (BTC), Ripple (XRP), Ethereum (ETH), Doge coin (DOGE) and Lite coin (LTC).

*Question 3: Explain the different categories token listed below and explain its features."
Utility tokens
Security tokens
Equity tokens
Non-fungible token (NFT)

Utility Token
Utility token is a digital asset created and given out to the public on already existing blockchain for developing a project in order to raise fund for that project that is yet to be delivered. it has value and is given out through Initial Coin Offering (ICO). The creators do this by given out other digital assets like Bitcoin or USDT so that people can get the token.

Simply put, it is a user token as it serves a specific purpose and if the project fail to achieve its aim, the token will lack value, thus cryptocurrency promotion will not be achieved.

Features of Utility Token

• It is decentralized.
• Holders of utility token has certain right in the decision-making of the project in its ecosystem.
• The token is tradable as it can be used to swap other virtual asset as well as paying for services within the confines of the project.
• Project developers use it as an investment tokens in order to raise fund for their project.
• It is not regulated by any law.
• It gives its holders rewards, in that they make profit either in the future or exchange their tokens for a particular product or services of the project is intended to serve.

Equity Token
This is a token that represent ownership as well as voting right of the future of the project, just as one own shares in a company, like stocks, bonds, and more. Thus, the holders has right of ownership of the company and are entitled to dividend of the company, as it makes profit. it is different from traditional stock because it is recorded on blockchain or digital ledger. Therefore, there is transparency in the investment, the transaction is faster and unchangeable.

Equity tokens are issued to the public through Equity Token Offer (ETO) by first registering on an exchange platform, states its purpose - its investment terms and provisions, carryout a pre-ETO campaign in order to offer a particular amount of token privately. If the aim is reached through this means, the token is given out. But if the desired goal is not achieved, they will carry out public offer, whereby companies and individual investors can buy the remaining tokens, thus they are legally given ownership of the token after the binding agreement is signed by both parties.

Features of Equity Token

• It is decentralized, which means its value is stored on blockchain network.
• It is regulated by the law of the country where the token is given out.
• It has value because it is an asset.
• Holders has voting right in the future of the company.
• Holders also has a certain percentage of the company's profits in form of dividends.

Security Token
This refers to digital asset like stocks, bonds, etc, which represent external or traditional asset. This token serves as a connection between traditional finance and cryptocurrency, hence holders are given the opportunity to own some percentage of company shares as they have their tokens.

With this token, the holders has the right to contribute to the decision-making of the company, which is their proof of ownership, hence are qualified to receive dividends from their profits. In other words, more cryptocurrencies will be accrued to the investors/holders of this token. They are given out during Security Token Offering (STO).

Features of Security Token

• It is built on blockchain network, therefore, the transaction is safer, transparent and are cost effective.
• It is regulated by laws.
• They are tradable assets.

Non-Fungible Token (NFT)
This refers to the type of virtual asset that is special and highly protected by means of codes and is used to build and authorize ownership of online assets. NFTs are regarded as another form of investment that are not replaced with another form of item that has the same features. They are in form of collectibles like virtual real estate, sport trading cards, video clips, and more. Non-Fungible tokens are built using smart contracts as the code is added into the token when it is ctraeted. The smart contract determines the qualities of NFT like ownership and transferability.

Also worthy of note is that NFTs help content creators to showcase their skills digitally, interact with each other virtually, gives them the chance to store value of their assets, buy and exchange digital art by means of blockchain network.

Features of NFT Token

• They are cryptographic tokens and that makes it to be highly secured.
• They cannot be replaced with other tokens even the one with similar characteristics unlike other cryptocurrencies like Bitcoin and more.
• NFTs cannot be shared into smaller units.
• They cannot be changed once they are encoded in digital ledger.
• It is decentralized. This helps to proof its originality and ownership.
• It is represented in the virtual world, that is buyers get their asset through digital image.
• Royalties (payments) are added into the token, so that artists can get a percentage sales in the future.
• An investor own a fraction of the NFT and the rewards from it.
• NFT has value as an investment, as the holders expect its value to increase over time because of supply and demand.

*Question 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).

STEEM
Steem is a crypto asset that is built on Steem blockchain network, which can be swapped with other cryptocurrencies on the exchanges. This token is acquired as a result of one engaging in the rewarding activities on Steemit platform. These activities includes quality content writing, commenting on quality write-ups, upvoting by the curators, etc. We can also understand STEEM with this illustration: STEEM is like one searching for a gold. First there is gold mine, which is Steem blockchain, then one must dig or search for the gold with a tool or equipment and that represent Steemit platform. After a successful search and digging/mining with the correct tool, we get certain amount of gold as the reward of our efforts daily. So STEEM is the reward after using Steemit platform on daily basis to create quality content, comment on quality post and upvotes, which are all mining activities or 'proof of brain' as used in steemit. This reward can be either 50% SBD or 50% SP.

This token (STEEM) has two derivatives - Steem Power (SP) and Steem Blockchain Dollars (SBD). While the Steem Power cannot be traded on the exchanges, Steem Blockchain dollars can be traded with other cryptocurrencies or even with fiat money or legal tender. Steem based currencies like Steem Power can be changed back to Steem through the process of powering down, which take some weeks to complete and Steem too can be changed to Steem Power by powering up. The image below shows the conversion process on steem and its derivatives.

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Powering up and Powering down

Steem can also be removed from one account to another account in order to for the later to perform some task in steemit.

Aim Of The Project
Meanwhile, many social media networks today do not reward their users after their timeless contributions to the growth of their platforms, but Steemit as a blogging social media platform, choose to say 'thank you' to their users, who make meaningful contributions through quality content writing, upvoting and others to their platform. This they do by rewarding them with STEEM.

Use Case
This token is useful in managing quality content creation, bringing people from all walks of life together through community building as well as interaction with people from far and near by means of the blogging activities.

Conclusion
From this week's lecture, I appreciate learning about coins, tokens their uses and categories. This will help me to make wise investment decisions with regards to cryptocurrencies.

Best regards to my Professor @reminiscence01

cc: @reminiscence01

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