Crypto Academy / Season 3 / week 8 - Homework post for professor @reminiscence01 (Understanding Tokens(
Good day to you guys, am happy to be part of this great academy. All thanks to our professor @reminiscence01 for excellent presentation. You are great. Now over to the homework task
What is Token
It is used to describe a unique virtual currency token or the method that cryptocurrencies are denominated in the world. Using their own blockchain, these coins represent fungible and tradeable assets or utilities. It is customary for crypto tokens to be used to raise money for crowd sales, but they can also be used to substitute other items. It is common for initial coin offers (ICOs) to be utilized as a crowd-funding exercise to assist fund project development.
Each token belongs to a certain blockchain, and the transaction of such token is paid in the native coin of the blockchain it belongs
Examples of Tokens and their blockchain
- Basic Attention Token (BAT) - Ethereum Blockchain.
- Uniswap (Uni) - Ethereum Blockchain.
- Cake (Cake) - Binance Smart Chain
- Peercash (Peer) - Tron Blockchain
- Aave (AAVE) - Ethereum Blockchain
Deferences between Coin and Tokens
Most users of cryptocurrency do made a mistake of thinking both coins and token are the same things, while other some individual knows they are different but can not give specific difference between them. For the purpose of the deferences, I will start with s short meaning of the two terms.
Coin
A coin can be define as a digital currency built on its own blockchain, we can also see it as the native coin of a particilar blockchain. While
Token can be define as digital asset, which is created under an already existing blockchain.
If we carefully read through the above definition, we must have been guided by some difference. But I will highlight some key deferences to Foster our understanding of the two key words.
1.) Coin: has it own native blockchain
Token: Does not have a native blockchain but built under an existing blockchain
2.) Coin is highly expensive to create, because it requires building a new blockchain.
Token is less expensive because is running on an existing framework or blockchain.
3.) Coin when making transaction in a coin, fee are usually paid with the coin.
Token transaction fee of a token are usually paid with the blockchain native coin. Eg. Bnb will be needed to pay as fee for transferring pancakes (CAKE)
4.) A Token can later develop and become a coin by migrating to it own blockchain,
Coin require no migration has it is already on its own blockchain.
Different Categories of Token
Bellow are the different categories of Token
1.) UTILILITY TOKEN:
They are used to access the services of a blockchain technology. Unlike security tokens, they aren't created for direct investment, but can be used to pay for services within their respective ecosystems. Token-platform relationships are reciprocal, as the former provides security for utility tokens while token-platform relationships generate network activity necessary to bolster platform economies.
FEATURES OF UTILILITY TOKEN
1.) Utilility Token holders are granted certain rights, including the right to possess or use a product, as well as the opportunity to vote on an issue.
2.) Utilility token can be exchanged for monetary value
3.) Can serve as charges for using the blockchain infrastructure or using services that are not centrally controlled
4.) Utilility token are use to award users with tokens for various actions, to improve their user experience.
5.) Utility Token are used for Payments within or outside of the blockchain. can as well serve as alternative to traditional financial payments.
6.) Utility tokens are used to distribute and share earnings from certain activities.
Security Tokens
Security Tokens are digital representations of various assets, such as fixed income and real estate. They can also be commodities or structured products and investment funds. As a result, these tokens are subject to centralized regulation, which dictates how they can be issued, controlled and exchanged. that qualifies them as a financial asset. Previously manual and costly processes can now be automated, and all parties can rely on a single, verifiable source called blockchain technology.
FEATURES OF SECURITY TOKEN.
1.) Security Tokens operates like a financial investment and gives you the right to vote.
2.) Purchase of security Token is like Investing in a company or group of companies
3.) The holders of security Token expects to make a profit from the purchase of the token.
4.) A third party's work will be used to produce the profit.
Equity Token
Equity Token is basically a form of security token which works as a traditional share of either the actual corporation or a third-party asset.
In the same way as with any stock purchase, investors own a certain part of the overall company. Their rights to a share of the company's revenues and a vote on its destiny can also be included in the agreement.
The technique of documenting ownership is the only significant distinction between an equity token and a standard share. With a standard share, it's recorded in a database, and it can come with a certificate. On a blockchain, an equity token is used to track corporate ownership.
FEATURES OF EQUITY TOKENS
The following are the features of equity Token.
1.) Every equity Token can also be considered as security Token.
Equity Token represent ownership of an asset.
Holding Equity Token denotes ownership and management of a company or business.
Non-fungible Token NFT
NFTs can be best discribe as a way to express the ownership of unique objects. They allow us to tokenize things such as art, valuables, and even real estate through the use of blockchain. Their ownership can only be changed by one person at a time and they're protected by the Ethereum blockchain, which prevents anyone from altering the ownership record or creating another one.
A non-fungible token is referred to as NFT. In economics, non-fungible refers to objects such as your furniture, a song file, or your computer. As a result of their unique features, certain products cannot be substituted for others.
FEATURES OF NON-FUNGIBLE TOKEN
The worth of NFTs originates through their availability. NFT developers can generate a limitless supply of non-fungible tokens; they often change the tokens to promote demand.
Most NFTs are undivided. You except if buy the entire cost of a digital item or buy no product.
They have a solid information tab explaining their uniqueness, which makes them stand out from the competition. This information is 100% secured and real.
Basic Attention Token
For the purpose or answering question 4. I will be writing on Basic Attention Token as one of the token mentioned in my question 1.
Basic Attention Token is a compesational scheme tha pays authors for their content and users for their attention. BAT, on the other hand, gives advertisers more for their money, and aims to be the new currency for advertising sector.
This token can be categories as Utilility token because it was built for a special purpose 2
Which is payment of service. The token is built under Ethereum Blockchain and pay it fee using Ethereum coin.
Basic Attention Token that compensates users and publishers based on the amount of attention they receive from other users. A fast and open-source browser with a privacy focus, Brave's internal currency is called Basic Attention Token (BAT).
Blockchain-based decentralised and transparent digital advertising exchange is what BAT aims to achieve with its product, BAT.
Conclusion
This class has advance my knowledge on on what token is, and I have been able to differentiate between the two and know some basic categories of token.
Thanks.
Cc:
@reminiscence01
Hello @hopeofgod , I’m glad you participated in the 8th week of the Beginner’s class at the Steemit Crypto Academy.
Unfortunately, i noticed you have built your reputation with a bot and not organically. This act is not acceptable in Steemit Crypto Academy.
Score: 0
Hello professor @reminiscence01, thanks for the observation, but the claim that I built my reputation with not is not true, you can try to see the full version of my account in desktop mode where it show the memo, you will notice non of the bid was accepted by tipu. You can try to go through my post as well to see if tipu voted any of my post and how I develop my reputation. I have been on 50 + reputation since February and I built it with good Content reward. I wasn't able to take part in cryto academy because of low steempower which I power up recently, please kindly reverify this claim. I didn't built my reputation with bot, I do make some transaction with bot but not accepted by the bots for reasons best know to them and is never for the purpose of reputation as I have been on the reputation for long. Please in your kindness, kindly revisit this claim and remark my homework.