Crypto Academy Season 3 Week8 Homework Task For @reminiscence01 Submitted By @simeon00 Date:21-08-21
"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)
I understand that tokens are digital currencies or assets that are without their own blockchain network, rather these digital assets are built on another blockchain.
Token users can make crypto tokens with the use of one of the multiple platforms in the DeFi(Decentralized Finance) network.
Ethereum is one of the most common options and of course it gives it's support for smart contracts.
In fact, majority of the crypto tokens currently available are ERC-20 tokens as a result of the fact that Ethereum platform simply facilitates building tokens on the Ethereum blockchain. Recently, there are multiple tokens available in the market such as Tether(USDT), USD coin(USDC), DAI, UMA, Basic Attention Token(BAT) are some of the popularly- used digital tokens available at the moment.
Reference
Examples Of 5 Tokens And The Blockchain They Are Built On.
They are as follows:
Steem token which is built on steem blockchain.
Link token which is built on Ethereum blockchain.
REEF token being one of the first DeFi tokens is built on polkadot blockchain.
BEP-20 tokens is built on Binance smart chain,which is a fast-rising blockchain network.
TRC 20 token is built on Tron blockchain.
"Question 2: What is the difference between a token and a coin?
The following are some of the core differences between a token and a coin:
Coins can be used for making payments, while tokens are appropriate for many needs.
Coins are harder to invent than tokens that can be built on top of the existing blockchain such as Ethereum.
Coins are based on their own local blockchain network and are used primarily as a payment service within the blockchain and examples of coins are Bitcoin(BTC), which is the world's largest cryptocurrency by market cap, Ripple(XRP), Ethereum(ETH), Dogecoin(DOGE) and litecoin(LTC) whereas tokens are crypto assets or cryptocurrencies that lack their own blockchain network but rather are built on the already existing blockchain such as tokens built on Ethereum blockchain known as ERC-tokens,etc.
Reference
The image below depicts coins
Image source
"Question 3: Explain the different categories of token listed below and explain it's features:
- Utility tokens
- Security tokens
- Equity tokens
- Non-Fungible Token(NFT)
These tokens can be referred to as user tokens or coins that fire up various applications(apps) and have been in existence before the blockchain,and of course these coins are in other words known as app coins.
This type of token is issued out when generating funds toward a project that is undergoing development as the project performs an Initial Coin Offering(ICO).
When a company makes a utility token, it then implies that the company is fundamentally making a kind of crypto printed paper that is subject for collection in the future at reduced amounts for an outstanding use of a product or service.
Utility tokens are not used as assets for they can be released from the federal laws controlling securities if they are well established.
Examples of utility tokens are Filecoin,Siacoin,Civic.
The token owner reserves the right both to make use of or own a product and to make a determined effort to get particular cases or topics.
Utility tokens make it possible for the owner to have access to decentralized storage. These utility tokens give the exchange value equivalent to the services they render.
3.This token enhances the owner's experience by offering rewards for certain things.
4.Utility tokens function as currency in the blockchain,and it can also be substituted with financial payments in the days ahead.
5.These tokens can be distributed for particular earnings.
These are crypto assets that get their value from an external asset that can be bought and sold, and these tokens are under Federal laws that control security.
Hence, security tokens are under compulsion to adhere to these federal laws or regulations, and infringement or violation of these laws would lead to serious results such as punishments and possibly the projects development would be obstructed.
Security tokens represent assets such as companies, entitlement to payments of interest or dividends,etc.
When it comes to economic function, security tokens are just like bonds, derivatives and equities.
Security tokens also provide a wide range of apps known as securitized tokens, if it begins to comply with the laws as required.
They electronically prove that identities are real by storing personal data.
Security tokens are given by Security Token Services(STS), which proves that the person's identity is genuine.
Security tokens may be used as a substitute for, or besides a password to indicate the owner's identity.
4.Security tokens are not usually secure as they may be lost,hacked or even stolen.
Reference
Majority of companies form equity tokens to produce a share in the company.
Equity tokens equip an investor with a voting right so as to be involved in making decisions regarding the core project.
In the same vein, equity token users are qualified to collect dividends from the profit the company makes. For example, holders of equity tokens can be said to own a share of the company's core assets or stock.
Equity token is contrasted with traditional assets in the area of method of property registration, for example,it is stored in the blockchain where transparent and stable transactions can be found, while a traditional stock is registered in a database and can be followed by a paper certificate.
Equity tokens are flexible in the way it is given through a public or private placement thus making it possible for investor's rights to be protected.
Investors not only share in the blockchain network development, but also collect monetary payments which depends on the level of the token's development in the cryptocurrency market.
3.The interchangeability of equity tokens are managed by a ruling body within a person's country where it is issued.
Reference
A Non-Fungible Token is a type of asset that depends mainly on cryptography or distributed ledger technology(DLT) that is special and used to design and certify ownership of digital assets.
These Non-Fungible tokens include cartoons,music,films,video clips,post cards,virtual real estate,etc.
NFTs furnish a secure record that is labelled with special identifying code that is stored on blockchain.
Unlike fungible tokens such asstock,bond,etc, NFTs are believed to be an alternative investment that is not replaceable with the same item.
NFTs are not replaceable and neither are they exchangeable with the same item, unlike fungible tokens.
NFTs are indivisible, for example,the token of the Non-fungible token cannot be split into smaller denominations, just as one dollar might be split into 10dimes,which are coins of the US and Canada that are worth 10cents.
Another feature of NFTs is that they are unchangeable,hence once they have been stored with the use of blockchain technology,they can never be changed.
Reference
"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)
In this part, i am going to be focusing attention on a token called steem token. The following image depicts this token.
Steemit, which is steem's main platform is a social media platform that is built on the steem blockchain. Steem is one of the three virtual tokens that comprise the steemit network. Steem is the basis of the digital currency of the steemit network.
It can be exchanged for other cryptocurrencies such as Bitcoin through various main exchanges.
In other to vote on a content or article, it's necessary to convert steem into steem power(SP) through a process known as powering up. Steem can equally be converted into Steem Dollars.
Certainly, steem token is built on steem blockchain.
But then, the question is, how can an individual earn steem?
Earning or acquiring steem can be achieved by first of all signing up on steemit network or platform, thereby becoming a steemian by writing and posting content or article, commenting on other people's posts, networking,etc.
The more valuable contributions a steemian makes in the above-mentioned areas, the more steem he earns.
However, there are two significant ways a steemian acquires steem and they are buying and earning it, and of course buying steem is likely the quickest way of earning this token through the steemit community.
Many opportunities are available to get rewards by taking part in the steem network, in that case issuing rewards for creating quality and original content, voting or curating content that adds value to people's lives is the main aim of this project.
Another interesting way to boost one's influence and earnings on the steem network is by increasing the steem power(SP). The more an individual increases his Steem Power in the platform, the more influence and voting power he has which in turn provides more opportunity to earn rewards.
Reference
Cc:
@reminiscence01
Hello @simeon00, I’m glad you participated in the 8th week of the Beginner’s class at the Steemit Crypto Academy. Your grades in this task are as follows:
Observations:
steem is not categorized as a token; it has its blockchain.
Recommendation / Feedback:
Thank you for submitting your homework task
Thanks @reminiscence01 for assessing my homework task and also for the accompanying grades, i promise to apply all the suggestions given to me in my subsequent homework assignments.