All You Need to Know About Tokens in Cryptocurrency
Thank you @reminiscence01, for the great lecture on Tokens and Coins this week. I have learned the major difference between the two. Thus, I am here to try my best in the homework task.
Background oicture
A token is a virtual currency built on a blockchain and it’s tradeable assets or it can be utilized for activities on the blockchain. It is created and issued to the public through public sales or used to raise funds for the project.
Several blockchains allow tokens to be built on them. Example of tokens and the blockchain on which it is built are:
1.Pancakeswap Token (CAKE): Built on Binance Smart Chain
2.Axie Infinity token (AXS): Built on Ethereum blockchain
3.Uniswap Token (UNI): Built on Ethereum blockchain
4.BitTorrent (BTT): Built on TRON blockchain
5.WINkLink (WIN): Built on TRON blockchain
Coins are tied to a public and open blockchain, in which anyone is free to join the network, while tokens are issued for a particular project and can be created on the existing blockchain. For example, Bitcoin, Ethereum, and Litecoin are coins, while CAKE, UNI, and WIN are tokens.
Coins are not created to serve any purpose other than acting as money, while tokens are created to serve purposes like voting, security, governance, among other purposes.
Tokens can be bought by using the coin, but coins cannot be bought with tokens.
Utility tokens
This is a special type of token that is created to capitalize or fund new projects, start-ups, companies, or project development groups.
The purchase of utility tokens is geared at making a profit for the buyer. It also holders access to the features of the project, like voting. Examples of utility tokens are Basic Attention Token (BAT) and Golem (GNT).
Security tokens
This is a tokenized security in digital form. Securities like equity, debt, and a hybrid of the two can be tokenized to secure a network. The most popular blockchain where security tokens are created is the Ethereum blockchain. An example of a security token is Blockchain Capital (BCap).
Equity tokens
This is a type of security token that acts as a traditional stock asset. It gives holders ownership of the investment.
Equity tokens can be represented in many ways, such as futures, actions, options contracts, tokenized companies, among others.
Examples of equity tokens are Neufund, Slice, Document, BFToken, RRT Token, among others.
Non-fungible token (NFT)
These are unique tokens that cannot be replaced with another of their kind. For example, each NFT when created remains the only one of its kind and does not exist anywhere else in the world. Most NFTs are built on the Ethereum blockchain. A couple is built on Binance smart chain.
It can be in form of music, drawings, or cards. Just anything digitally designed.
Examples of NFT are BNB Master, La-la lands, Cryptokitties, among others.
This is a BEP20 token originally launched on Binance smart chain in September 2020. Its main function is to bring incentives to liquidity providers in the pancakeswap platform.
Its Binance smart chain-powered DEX and AMM allow all BEP 20 tokens to be swap safely and efficiently. It can be compared to uniswap in terms of features, as it offers a decentralized trading experience with liquidity pools locked.
It is the largest Dapp on Binance smart chain and currently has over $4 billion total value lock (TVL) across its liquidity pools.
The syrup pools on pancakeswap can be utilized to make profits. As a decentralized platform, this is where anyone can stake cake to mine other tokens listed on it, with high annual profit returns ( APR).
With a market cap of $4,909,506,623 and a circulating supply of 210,452,170.52 CAKE, the token has proven to be one of the most sought-after by investors.
Tokens are easy to create, as they can be created on existing blockchains. It is important that we do due diligence on any token we intend to invest in, to avoid investing in scam projects.
The crypto world is so open that anyone can get involved and with different motives. Thus we must apply caution.
Thank you.
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Hello @princesstj , 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:
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