Crypto Academy Season2week2 Tokens Part1 Homework Post For @Pelon53 by @Nikoyana

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Good day steemians i want to welcome our new professor to steemit cryptoacademy @pelon53

In my own definition token is an asset with value created by a company to its users to enable the company to be able to identify them,provide services to them while

ln crypto tokens are electronic asset that exist on other blockchain and backed or supported by smart contracts and can only be used in a particular ecosystem.

Cryptocoins on the other hand are electronic currency being used for transactions such as buying or selling of other cryptocurrencies or payment of services all these are done electronically and verified by devices such as computers or servers.examples of coins are litecoin,bitcoin.

Whilst Crypto currencies are produced on their own blockchain such as ether a coin that runs on ethereum network which is the blockchain to produce a token called ERC 20 token the ether is used to fund the production of the ERC 20 token. Cryptographically when a token holder wants to access the service of the company all the holder needs to do is enter his/her password or keys using biometric such as eye or voice scanning on his/her device and will be able to have access anytime anywhere.

Types of Token

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1.Utility token: here tokens represents the value of services to be offered by the company to their user such as subscribing for that service by the customer by paying with any medium of exchange for that token, Utility tokens can easily be converted to raw cash and easily transferable from one person to another.

In the world of crypto ICO(Initial coin offering) firms who launch and fund the development of their coin offer a token to their investors who in turn pays with an acceptable medium of exchange, these tokens depicts the amount of coins that has been purchased by the investors,the investors in turn will be hoping to make profit when the prices of the coin rises in the near future.

Here tokens given to users represents value of service the company is owing the user and not possession in the company.
Another practical example of practical utility token can be booking a ticket for a transport, immediately after the booking you are being given a token in a form of address in numbers and as soon as you reach your destination that service is over, or another example is subscribing to a music site to be able to download music immediately your subscription finishes the service is over.

Example of utility token

Basic attention token is an example of utility token which is handed over to content creators after they have purchased it and the token gives them the right to be able to publish or display their creation on the site and receives direct payment from users visiting the site.

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2.Security token is a token that is granted from the firm to the investors which indicates the investors possession on physical things such as real estate,investment, electronic devices or cars.

Security tokens electronically can be in a form of cards, or chips or devices where the user information has been stored through eyes scanning or thumb printing or voice or pin or address which identifies only the user to be able to give access to any data or device the user want on that particular device such as car, computers, etc

ln crypto tokenholders can keep their token inside wallet or sell it for stable medium of exchange this is done to avoid sending of false mail by hackers to hack information on the token or against viruses.

Security contract are backed by law so any default from any of the parties whether investor or the firm may attract penalties.Before security tokens are transferred it has to pass through the due legal process.
Here there is a contract that binds the investor and the firm, of a percentage of profit from the firm to the investor which can be annually, quarterly,or bi-annually, this is done because of the token the investor is holding.

Example of security token

Polymath is a security token blockchain that ensures government rules are strictly adhered during the issuance of digital securities and uses an ethereum based token called ST-20.

3.Equity token:

Equity which in dictionary term means justice and from the word equal.Equity token represents the part ownership of a firms stock or shares an investor owns to him/herself, investors obtain equity token from companies through equity token offering.Equity token can be offered through private or public. Since equity tokens operate within the law framework it has to go under some procedures when they are issued such as

1.The company has to be registered on an exchange platform to be noted and verified as an equity issuing company.

2.The company must declare its terms,aim,plans and team to the investors.

3.Perform a pre-equity token offering is done when tokens are given to investors in a private manner before the public offering,this is done to know the magnitude the private equity token offering can go,if it turns out to be productive and sucessful it ends there if not it continues to the public offer.

4.Public offer at this point the ETO is being offered to the public or generally everybody.

Example of equity token
Neufund : has an equity token called NEU,NEU is an ethereum ERC20 token.

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