Crypto Academy Home Work Post Season 3 Week 8: Understanding Tokens

What is Token

Based on my understanding of the class for the week i believe that a token in a simple term is simply something, that is an asset in this case a digital one in the form of cryptocurrency that exist on top of an already existing coin or blockchain. A token is being built on top of an existing coin and does not have it's own native blockchain unlike a crypto coin.

A token for instance like pancake bunny which has it's usecase but does not have it's own native blockchain as is the case but is built on the Binance smart chain blockhain is a typical example of what a crypto token is. Also we have thorchain which is also built on binance smart.

We also have Erc-20 tokens, that is tokens built on ethereum blockchain like basic attention token (BAT) and Tenx(pay). This too token runs on the ethereum blockchain

We also have Revain token which is built on trx blockchain known also as trc-20 tokens. Though we can also make the case that revain is built on two blockchains, the tron and ethereum blockchain.

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A Token & A Coin It's Notable Difference

It is often true that a token an a crypto coin has some similarities in that they are both run on blockchain technology and traded in a similar manner but there are notable differences between a token and a coin.

Well a cypto coin has it's own blockchain and derives it's value as a result of people's believe in that currency while a token is actually dependent on another coin's blockchain that they have no control of, so many small tokens may not have the financial means to run their own blockchain hence are built ontop of an existing blockchain. Like so many tokens are built on the ethereum network and this tokens derive their value from their usecase in most cases.

A coin also is what we know as a store of value in that we can transfer that amount to someone else. A crypto coin doesn't really do much apart from being an exchange of value between two person. While a token on the other hand has different usecases and often serves a specific purpose unlike a crypto coin which is merely a store of value almost like the US dollar bill.
A token does something and has to live within an ecosystem and depends on a platform for it to exist without which it would not exist.

We can also easily know what is a coin or token by visiting coinmarketcap.com and each crypto asset we click on we could see if it's a token or coin.

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As the image👆 shows when i clicked on axie infinity is clearly shows that is a token and not a coin.

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And i clicked on Btc 👆and it clearly depicts that is a crypto coin and not a token.

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Utility Tokens

A utility token can be explained as the expectation of use in a system. They often operate as access keys that tends to provide entry to a system and it's service and also provides a means to encourage user participation and it also allows transparency in operation.

Video game arcade tokens can be verywell be considered a utility token as well as basic attention token(BAT).

Utility token is representing a defined term set by a project which can function as a software licence or tokenized micro licence whereby pre-arranged licencing term can be formalized and define the function of the token.

What Is Security Token

A security token is a token that is backed by traded asset

This is a kind of investment contract and they often represent equity and a company's profit sharing or voting rights and these are governed by security laws and it is more strict to offer this type of tokens.

Security token may come in form of ICOs that explicitly sold security tokens for profit sharing, dividends and price appreciation and often not available for listing on major exchanges especially for centralized ones.

Security tokens tend to offer more legal access to crowdfunding for investors. It also offers less investor risk since they are required by the law to be transparent. We can easily access it's true value and one can easily tokenized this asset and have fractional ownership which leads to more liquidity.

Equity Tokens

Equity tokens are tokens that represent ownership of an asset such as a company stock. Equity tokens are like a subset of security token. Equity tokens also known as user tokens provides user with an access to future service or product.

All equity tokens are security tokens and they represent asset ownership. An equity token implies ownership and control and most often times the ICOs are heavily regulated in some countries.
Example of equity tokens include Dao, BFToken, RRT Token. etc

Equity tokens oftens retains value as long as the company is making progress. It's possible to issue tokens as non-voting shares, so you don't give out control of your company.

Non-Fungible Tokens

Non-fungible tokens known as NFTs are publicly authenticated on a blockchain technology serving as a signature to certify who owns it and that it is an original work. It is non-fungible which means it is unique and does not have a like-to-like replacement just like a painting, or a tweet or a maybe a 10 secs clip of a sports game or maybe a card. It is unique and has something that set it apart feom other asset class.

Some NFTs can be physical that is to say it can be touched, it is tangible like a painting or card while others are digital like video games or video clip or tweets as they case may be.

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REVAIN TOKEN

Revain is a reliable review platform. It's main purpose is provide the community a single source of dependable and honest honest report about projects and goods and other things as well.

Revain tools include blockchain technology which provides reliable and lucid for evaluation or assessment. Some of it's tools also allows other services to blend revain reviews and it's custom AI which analyzes all reviews and filters out low quality ones which provides a useful tool for companies a relationship with their customers and authentic and high quality user reviews on global product and services.

This revain project also offers its users rewards. It's gamification system allow users to earn RVN tokens for detailed for detailed and high quality reviews.

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As the image above clearly shows revain is a crypto token built on top of both ethereum and tron blockchain and can be ascribed a trc-20 token and an Erc-20 token ranking #90 on coinmarketcap.Revain has a 24 hour trading volume of $3,755,312 with a market capitalization of $957,632,117 and a circulating supply of 85 billion Rev coin. It's max supply is currently not available yet atleast on coinmarket cap. And currently trading at $0.01126 at the time of my exploration on coinmarketcap.

Conclusion

In the crypto space we often misplaced a coin for a token or vice-versa, most times newbies are often quilty of this and in some cases also even people who have spent much time in the space of cryptocurrency that is may not really know what makes a token and a crypto coin.

From this class and whilst doing my homework i have come to see one notable thing that set a crypto coin apart from any token, which is having it's own native blockchain which a token don't but depend solely on an existing blockchain. Also i think whenever in doubt we could easily go to coinmarketcap.com and it's feature there would easily allow us to know if it's a coin or token just by searching and clicking on any asset.