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)
Tokens otherwise known as crypto-tokens are digital assets built on an already existing blockchain. This means that they are not native to the blockchain on which they are built. For example, VeChain is a crypto-token built on the Ethereum blockchain. Also, USDT, the most popular stable-coin is a token operating on the Ethereum blockchain. The Ethereum blockchain has its own native cryptocurrency.
There are thousands of crypto token in existence with varying value and functions. Tokens are created through an initial coin offering (ICO)- this a fundraising method which attract investors to buy into the offering and receive the new token in exchange. These tokens are useful in accessing and utilizing the product and services the token-issuing company is offering. Tokens can also represent a stake in the company or its project. In summary, all crypto toke were created with a purpose in mind, which however is not limited to being used as a means of payment.
FUNCTIONS OF TOKENS:
Crypto tokens are created for specific and unique use which are usually properly explained in their whitepaper.- They can be used for economic and commercial purposes
- They can be used for staking purposes
- They are used for fundraising in a crowd sales
- They are used for authentication purposes as in security tokens
BLOCKCHAIN SAMPLES AND THEIR TOKENS
- Ethereum: About half (50%) of all currently existing and active crypto tokens are built on the Ethereum blockchain. The native coin of the blockchain is called ETH. Below is a list of the prominent tokens built on the ethereum network.
- ChainLink (LINK)
- Tether (USDT)
- Wrapped Bitcoin
- OmiseGo (OMG)
- Augur (REP)
- Basic Attention Token (BAT)
- EOSIO: This is another popular blockchain founded by Dan Larimer, the co-founder of Steem and Bitshare. The native coin of the blockchain is EOS. Below is a list of the prominent token built on the EOSIO network.
- SEEDS
- Everipedia (IQ)
- TokenPocket (TPT)
- Vortex (VTX)
- Telos (TLOS)
- Prospectus Gold (PGL)
- Binance Smart Chain: Binance Smart Chain is the Binance blockchain with BSC as its coin. Below is a list of the prominent tokens built on the BSC network,
- PancakeSwap (CAKE)
- Wazir X (WRX)
- KAVA (Kva)
- Thorchain (RUNE)
- Coin98 (C98)
- Safepal (SFP)
What is the difference between a token and a coin?
WHAT IS A COIN?
A coin as a cryptocurrency term is any digital asset is built on a native blockchain (i.e they own the blockchain network they run on). Coins are used primarily as a medium of exchange and making payments because they store great value. The idea behind the creation of cryptocurrency coin is to replace the financial system of the world and to challenge the government and banking rules. They are not created with the expectation to serve utility functions. Popular examples include Bitcoin, Polkadot, Ethereum and Dash.DIFFERENCES BETWEEN TOKENS AND COINS
Coins and tokens are words often used interchangeably even though they have different meanings. The differences between coins and tokens include:- Residence: Coins are native to the blockchain on which they are built while tokens are built on already existing blockchains.
- Function: The primary function of coins to be used mainly as means of payment. The functions of tokens is not limited to being used as means of payment, it differs depending on the type. It can be used to represent votes within a community or authenticate a document or service.
- Fabrication: Coins are difficult to create compared to token because it involves creation of a new blockchain with its own type of consensus algorithm and all. This is a major reason token are created to run on already existing blockchain to ease the stress.
Exception: To (almost) every rule, there is an exception. One of such exceptions is that of Ethereum coin (ETH). ETH is the native coin of the Ethereum blockchain, however its functions are not limited to being used as a means of payment. The coin can also be used to pay gas fees used in fueling smart contracts on the network.
Explain the different categories token listed below and explain its features.
Utility tokens, Security tokens, Equity tokens, Non-fungible token (NFT)
Utility Token
These tokens are native to decentralized network which are designed for specific application type. They are also called app coin because it enables users of an utility or app access to the products the company offer. It differs from security token because a person who posses an utility token has access to products and services the project/ company offers but has no share or claim to the company/project. Hence it is not a form of investment, the tokens are designed for specific use in mind. Common examples of this token type includes Siacoin, Augur, Omisego, Enigma and Aragon.Security Token
A security token is one of the types of tokens which represents a claim in a particular company, project or off-chain asset. It functions in a similar way with shares and stocks, but in a tokenized form. Security tokens are accompanied with benefits such as voting rights and a certain percentage of profit the project or company generates. Security tokens are said to backed by other assets such as gold or a company equity.Equity Token
An equity token is a digital asset created to represent a claim in a company or project. They are similar to security tokens and often confused with security tokens. The major difference between security tokens and equity tokens is that security tokens are backed by assets such as gold, real, estates or fiat money. However, equity tokens have a project or company shares liquidated into tokens.Non-fungible Tokens
Most of the tokens in existence are fungible, this means that a particular token xyz is of the same value with another xyz token. However, a xyz non-fungible tokens is not of the same value with another identical xyz non-fungible token. This means there can only be one original copy of a non-fungible token which can't be replaced or equal in value to identical copies. Non-fungible tokens usually exist in form of art works such as digital paintings, audio files, images and texts. They are mostly integrated in decentralized games such as prospectors, decentraland, cryptokitties, axies infintiy among others.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).
TETHER (USDT)
Source: Binance
Tether is a popular cryptocurrency token issued by the HongKong based company, Tether Limited. It is a stable-coin as its original design was to maintain a constant value of $1 (1 USD).
GENESIS
Tether which is the widely used name of the present cryptocurrency token by the Tether Limited wasn't originally called Tether, but RealCoin as at the time it was launched in July, 2014. RealCoin was built as a second-layer crypto token on the Bitcoin Blockchain. The name over time was changed from RealCoin to US Tether and now finally to USDT (Tether).
FOUNDERS
RealCoin (now called USDT) was launched in July, 2014 by Brock Pierece, Reeve Collins and Craig Sellars. These are very reputable people in the crypt space.
BLOCKCHAIN
Tether was initially built on the Bitcoin blockchain through the use of Omni platforms. Later, it was updated to work on different other blockchains which include EOS, TRON, ALGORAND, OMG and ETHEREUM blockchains.
PURPOSE
Cryptocurrencies have solved a lot problems mostly caused by centralization. However, it is highly volatile. The primary purpose of USDT is to combine the decentralization nature of cryptocurrencies with the stable value of the US Dollars. Hence, people can keep their funds in USDT without the fear of loosing its value.
COINBASE RANKING AND DATA
The current price of USDT as at the time of writing this post is $0.99. USDT is ranked number 5 with a market cap of $64,197,127,329 and a circulating supply of 64.21 billion USDT. It is available for trading on all cryptocurrency exchanges. The official website for the USDT project is https://tether.to/.
CONCLUSION
With the invention of the blockchain and cryptocurrencies, there have been new developments and growths in different sectors of the society. Bitcoin was invented with the sole purpose pf being used as a means of payment. But the blockchain technology is more robust and applicable in solving wide ranged problems. Blockchain began to serve other functions and tokens were invented to perform other functions not primarily monetary purposes. Tokens were created because it is faster to build on an already existing network.Thank you!!
by @damzxyno
Professor: @reminiscence01
Hello @damzxyno (60) 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:
You have explained every question in a clear term. Thank you for participating in this homework task.
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