Cryptoacademy season 3 week 8- Homework post for @reminiscence01: Understanding Tokens
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)
Token
A token is simply a digital currency without a Blockchain of its own. Unlike a coin, a token created from ICO's, isn't built or designed to be a native coin to any blockchain, so due to this, it is just traded and mined but doesn't serve as a form of "fuel" used to power transactions occurring in a Blockchain. Because of this, it is built and worked on a, should i say "borrowed Blockchain" where all the records of transactions with the currency is usually recorded.
Examples of Tokens and their blockchains
| Token | Blockchain |
|---|---|
| Dai | Ethereum |
| Revain | Tron |
| Tether | Tron |
| Binance USD | Binance smart chain |
| Pancake swap | Binance smart chain |
2)What is the difference between a token and a coin?
They're not all that different in the sense that both are digital currencies but are dissimilar when it comes to their uses. As i said in number 1, a token is a cryptocurrency which can be traded or exchanged by nodes but isn't built or designed to be a native coin to any Blockchain. Every Blockchain needs a a form of energy that can help fuel it's transactions and that's where a coin comes in. Unlike a token, a coin is the native cryptocurrency of a Blockchain that can be traded and exhanged and can also be used as a "gas fee" in the fueling of transactions in the Blockchain. A coin can be traded and exchanged without a token but a token cannot be traded or exchanged without a coin.
3)Explain the different categories token listed below and explain its features.
Utility tokens
Security tokens
Equity tokens
Non-fungible token (NFT)
- Utility token: According to the Merriam-Webster, a utility token is:
a digital token of cryptocurrency that is issued in order to fund development of the cryptocurrency and that can be later used to purchase a good or service offered by the issuer of the cryptocurrency
source
Lots of cryptocurrencies are being created every day and the developers of these currencies would want their project to grow their project. So they apply business sense into this by should I say advertising their project through an initial coin offering(ICO). In the ICO, tokens are being sold in large quantities to provide investors for the project in order for it to grow. These tokens given out are called the utility tokens.
Security Tokens: These tokens are digital assets that serve as a "pass". A pass in the sense that it gives a user right to own and be a part in the fraction of shares or stocks in an organisation. The token simply reresents a stake in a fraction of a company's shares. In security tokens, the owners of the token have no direct ownership of the shares, therefore cannot control the market and are dependent on a third party.
Equity Tokens: Very similar to the security tokens concept, equity tokens differ in the sense that they represent a fraction or fractions of a company's shares. The owners of this token have direct ownership of fraction of the shares and can influence the market concerning the token.
Non-Fungible Token: Non-Fungible Tokens are tokens that cannot be replaced. By this I mean that they are one of a kind and when traded, traders get something entirely different in return. NFTs are usually designed to store up more information in the original Blockchain that they reside in. One can trade 1 Satoshi and get 1 Satoshi back as it would be the same thing but one cannot trade an NFT and get the exact same amount back. An example is the Beeple NFT.
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).
Revain Token
The whitepaper and aim of the project
The Revain token was developed as a digital asset on the Tron Blockchain to be the main form of exchange on the Revain platform. The Revain platform is a decentralized review platform which allows companies and organisations to give their reviews to products made by the general public and reward them if their content(product) was quality enough. It came with it's own AI which was used to filter out poor quality content and only reward good ones with the Revain token and through this, maintained a high level of transparency as every transaction carried out could be viewed but not altered.
Features
- It is a trade able and exchangeable asset.
- It was built on the Tron Blockchain which makes it a TRC-20 token.
- Since it was used for rewarding of nodes, it is an asset that holds value in the market.
Uses
- It was used in the rewarding of people on the Revain platform.
- It can be used for cryptocurrency trading in the market.
Conclusion
A token differs from a coin mainly because it isn't built to be the base cryptocurrency of any Blockchain and a coin is. The types of tokens are utility, security, Equity and the Non-fungible token. The Non-fungible token is that which cannot be exchanged for something of equivalence. Tokens are mainly used during ICO's for fundraising of a project in order for the project's development.
Beautiful lesson by @reminiscence01, can't wait for the next season to continue getting wonderful lessons like this. I hope you like my write up as much as I like the lesson. Thank you.
CC: @reminiscence01