Hello Steemians, I welcome you all to week 10 of the Steemit Crypto Academy. I'm honored to have been part of this great community because I have gained a lot of knowledge about blockchain and cryptocurrency technology. Today's lesson was delivered by professor @pelon53 on Tokens. After successfully taking the lesson and studying further, I present my homework task in this post.

Token

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I have always interchange the term token and coin ever since I knew about cryptocurrency. I never knew that they both differ until after taking this lesson. Tokens are cryptocurrencies built on an already existing blockchain. Tokens do not have a blockchain of their own like Coins. Tokens are created when developers build Dapps and project on existing blockchain like Ethereum, Tron, Bitcoin, Binance, Neo, etc. During this time, tokens are created and issued out during Initial Coin offering (ICO) to help raise funds to develop the project. These tokens can represent a stake, voting rights in the cryptocurrency ecosystem. Developers build projects using Ethereum smart contracts which enable them to create a native token to be used in their applications. These tokens serve as payment purposes within the application ecosystem and can also serve as governance and voting rights for community-driven platforms. An example is Compound; a DeFi project built on the Ethereum platform for lending protocol. Compound has its native token known as COMP which serves as a governance token in the Compound ecosystem. Tokens on the Ethereum blockchain are known as an ERC-20 token, tokens on the Tron blockchain are known as TRC-20 tokens, tokens on Binance smart chain are known as BEP-20 tokens, tokens on the NEO blockchain are known as NEP-5 tokens. Though there are standard tokens on the Ethereum blockchain like Non-fungible tokens known as ERC-721 tokens.

Security Token

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From my understanding of security tokens, they are cryptographic tokens that represent proof of investment in traditional tradable assets. Security tokens represent a stake in external or tradable assets. We can look at security tokens as stocks, bonds, or other equities where profits generated from the companies assets are being shared among the security token holders. Security tokens are subject to government regulations and supervision.

Benefits of Security Tokens

• Transparency: In blockchain technology, transactions and transfer of funds are made public and immutable. This creates transparency and allows everyone to keep track of transactions.
• Instant settlement: Unlike traditional finance that takes days to settle the transfer of assets, Security tokens offer a faster and automated means of settlement on a public ledger. Similarly, middlemen like the banks and brokers are eliminated which makes carrying out transactions faster.
• Availability: The traditional financial market work within the business days and business hours I.e 8 am to 5 pm from Monday to Friday. Security tokens run on a blockchain network that is active and available 24/7.
• Enhances Traditional Finance: The present-day traditional finance is expensive due to a lot of middlemen and transaction fees. With the use of security tokens, middlemen are eliminated from the system and the cost of transactions is lowered.
  -Creates a free market: Security tokens create a free market for anyone on the internet. This can bring investors from all parts of the globe and also increase asset value.
• Elimination of fraud: Investors' property rights are secured and recorded using a smart contract that cannot be changed or removed.

Example of Security Tokens: NEXO

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NEXO is the native token for Nexo. Nexo is a blockchain-based lending platform built on Ethereum Blockchain. In Nexo, users are allowed to deposit accepted cryptocurrencies such as BTC, ETH, XRP as collateral to receive fiat currencies or stable coins as loans.
NEXO serves as a security token. Users lock NEXO tokens to get discounts in interest rates and also profits in deposited funds. Similarly, holding NEXO tokens allows you to earn dividends generated from Nexo profits. This makes you a stakeholder in Nexo. The platform has gained dominance and has over 1 million investors around the world with more than $4billion in its portfolio.
Ethereum smart contracts and oracle are used to manage loans automatically. When a user makes an accepted cryptocurrency into a Nexo wallet, the oracle establishes the loans and transfers them to the user automatically. Similarly, when the user repays the loan by making a deposit, Oracle returns the cryptocurrency and records the transfers on the blockchain 1.

Market Stats of NEXO

Stats	Overview
Price	$3.48
Rank	#62
MarketCap	$1.90 billion
Total supply	1 billion
Circulating supply	560 million
24hr trading volume	$14.90 million
All-time high	$3.40
All-time low	$0.05543
Price change since launch	+$3.22
ROI since launch	+3,309%

Utility Token

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Utility tokens are tokens created to help a cryptocurrency company generate funds through ICO. Utility tokens are issued out during ICO or presale to generates funds to help develop a project. Similarly, utility tokens serve as a power-driven tool within the project ecosystem. Holding Utility tokens gives users voting rights to participate in activities within the project's ecosystem. Utility tokens can be used to exchange goods and services within the ecosystem or they can be exchanged for other cryptocurrencies. Utility tokens are not subjected to any form of regulation. Scammers take advantage of utility tokens to create fake ICOs and get away with people's funds.

Benefits of Utility tokens

• Utility token helps start-up cryptocurrency companies to raise funds to develop their projects.
• Utility tokens can yield huge profits in the long run if the underlying project ends up being successful. This is because, during ICO, utility tokens are sold at a relatively low price.

Problems with Utility token

• They are unregulated and most of them end up being a scam project after investors must have bought the token during ICO.
• The tokens have no value if the underlying project ends up failing after ICO.
• Utility tokens suffer liquidity problems as many of the projects end up not reaching it's potential. This will make it very difficult to easily buy or sell the token.

Example of a Utility Token- Golem (GLM)

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Golem network was launched in April 2018. Golem is a decentralized peer-peer platform where users can access processing and computing power to carry out tasks like scientific computation and rendering. One benefit feature of the Golem network is its decentralized nature. There's no central authority and all the users have equal rights and power in the network.
GLM is the native token used in the network for payment of fees on the network. It is the currency that drives the Golem network. Every transaction that goes on in the Golem network is carried out using GLM token. An ERC-20/token built on Ethereum blockchain.

Market Stats of GLM

Stats	Overview
Price	$0.455
Rank by MarketCap	#127
MarketCap	$472.6 million
Total supply	1 billion
Circulating supply	1 billion
24hr trading volume	$19 million
All-time high	$1.25
All-time low	$0.0087
Price change since launch	+$0.46
ROI since launch	+3,044%

Equity Token

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An equity token is a form of security token that represents ownership or share in a companies asset. Equity tokens are given to investors as equity and voting rights over the underlying assets' future. Similarly, equity time holders are also entitled to dividends and profits from the underlying assets. Equity token differs from the traditional share is in the mode of recording data. For equity tokens, ownership is encrypted and recorded in the blockchain rather than having it recorded on paper like the traditional share 2

An Example of Equity Token - Quadrant Token

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Quadrant is a US-based biotechnology company. In 2017, Quadrant announced its adoption of blockchain technology into bioscience. The idea was to issue an equity token that will leverage the power of blockchain and allow investors to participate in helping the company make lives better for children and families. Quadrant converted its common stocks into an ERC-20 token called Quadrant token. Each of the tokens represents a common equity share of Quadrant 3. Similarly, Quadrant token holders will earn ownership of Quadrant and have all the rights and decision-making in the company. Quadrant successfully raised $13 million through the issuance of Quadrant tokens.

In conclusion, the cryptocurrency industry is yet to be adopted and several projects are being developed daily. Having an understanding of the coins and projects will help investors make better investment decisions and avoid risk.

Thank you professor @pelon53 for this Amazon lesson.

Best regards to professor @imagen