Today's lesson covers a very important topic "Understanding Tokens". Thank you Professor @reminiscence01 for letting us know about Understanding Tokens through this lesson. I learned many unknown things. I hope the lesson will be helpful for everyone.
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
Tokens are digital assets in the crypto space created in an existing blockchain. They are tradable and also have value. For example, Tron is a blockchain and its native token is TRX. Besides these, there are other tokens - JUST, WINK, IG GOLD, etc based on the Tron blockchain. It can also be a token physical asset for example when we go on a bus or train we have to buy tickets with money. With that ticket, you can only travel by bus or train but it is not possible to buy fish with it.
ICOs are carried out before any token is launched. It offers tokens to crypto enthusiasts. Many people invest here and benefit in the future.
Below I listed some tokens and also their blockchain name:
1- FTX Token (FTT) - Binance Smart Chain
2- Tether (USDT) - Ethereum blockchain
3- BitTorrent (BTT) - Tron blockchain
4- PancakeSwap (CAKE) | Binance Smart Chain
5- Basic Attention Token (BAT) - Ethereum blockchain
| Token Name | Blockchain |
|---|---|
| 1. FTX Token (FTT) | Binance Smart Chain |
| 2. Tether (USDT) | Ethereum blockchain |
| 3. BitTorrent (BTT) | Tron |
| 4. PancakeSwap (CAKE) | Binance Smart Chain |
| 5. Basic Attention Token (BAT) | Ethereum blockchain |
2)What is the difference between a token and a coin?
Token and coin are the two terminologies that many people think are the same in cryptocurrency. But there are some differences between them. Let's look at the differences in the table below:
Difference between a token and a coin
| Token | Coin |
|---|---|
| Tokens are created in an existing blockchain also don't need complex programming. eg.: Just token, Tether, BitTorrent, etc. | Coins are built on their existing blockchain. e.g.: BNB, ETH, TRX, etc. |
| Tokens are easy to create in an existing blockchain. | Coins are difficult to create than tokens. |
| Distributed with IDO (Initial DEX offering) or ICO (Initial Coin Offering) | Created with Proof of Stack (PoS) or Proof-of-Work (PoW) in blockchain |
| The price of the token is influenced by the project | The price of the coin is equivalent to fiat currency. |
| Tokens have less value than coins in the crypto space. | Coins have more value than tokens in the crypto space. |
3)Explain the different categories of tokens listed below and explain their features.
Utility tokens
Security tokens
Equity tokens
Non-fungible token (NFT)
Utility tokens
Utility tokens are usually created for fund-collecting. An organizer of cryptocurrency requires a lot of funding before starting a new project. So arrangements are made to take funds from investors through this token.
These tokens are distributed through ICO. Utility token holders can take advantage of stacking and decision-making in the investment. These are built on the existing blockchain. So, it is very easy to create utility tokens.
Features of Utility tokens
- These tokens are distributed through IDO or ICO.
- Holders can participate in different activities such as stacking and decision making.
- The price of these coins depends on supply and demand. Sometimes its price highly increases due to high demand.
- These tokens are tradeable.
Security tokens
The security token is an electronic instrument used to verify personal identity and store personal information. Security tokens actually exist and confirm the blockchain's own ownership shares. The security token is able to restore credibility that people have doubted earlier. Fund collection through Tokens is done through ICO. But in the absence of regulations, people lose faith in the utility token, then the security token arises where there are many regulations and provide security.
Features of Security tokens
- Investors get dividends from the organization.
- Investors can also participate in the decision-making process of the organization.
- It is transparent because various activities are recorded on the blockchain.
Equity tokens
Equity tokens are like security tokens. These tokens are created for human investment and through this investors prove their ownership of crypto space investment. Through which investors get to share and voting rights of the company. These tokens have different forms of stocks, tokenized companies, tokenized real estate, and options contracts, etc. This token is very useful for the fund collection of the new organizations.
Features of Equity tokens
- Investors get dividends from the organization.
- Built on existing blockchain.
- Alternative way to the traditional asset.
- It is transparent because various activities are recorded on the blockchain.
Non-fungible Token (NFT)
Non-fungible tokens (NFT) are unique digital artworks. By holding an NFT, we can be the owner of digital art. NFT tokens are not interchangeable because they are unique. NFT tokens are represented in the digital ledger as paints, pictures, videos, and audio, etc. NFT tokens example Axie Infinity (AXS), Enjin Coin (ENJ), Decenterland (MANA), etc.
Features of Non-fungible Token (NFT)
- These tokens are unique digital work.
- NFT tokens are not interchangeable.
- Built on existing blockchain. Most tokens are built on the Ethereum blockchain.
- People use it for satisfaction or investment purpose.
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).
FTX Token (FTT)
FTX Token (FTT) is a native token of FTX Cryptocurrency Exchange. This token was founded by Sam Bankman-Fried and Gary Wang on 8th May 2019. Sam was a trader and Gary was a software engineer at Google and together built FTX.
Features of the FTT Token
- FTT is the native token of FTX exchange
- The token is built on Binance Smart Chain
- This token can be used as collateral.
- The token is interchangeable that means can be exchanged with other tokens.
- These tokens are regarded as leveraged tokens so traders don't need to try margins.
Mission of FTX Cryptocurrency Exchange
FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products, and leveraged tokens. We strive to develop a platform robust enough for professional trading firms and intuitive enough for first-time users.Source
The aim of the project
FXT is a cryptocurrency trading platform. There are many experienced traders who have been involved in trading for a long time. Basically, it is created after seeing the fault in future exchange. To overcome this, The FXT cryptocurrency trading platform was created along with its native token FTT in 2019. The good news is Binance invested here in 2019 and purged its share.
At the time of its December 2019 investment, Binance said that FTX had an average daily volume of nearly half a billion U.S. dollars across all of its products.Source
FTT token is unique and demandable in the market. Currently, this coin ranked 29 and the price of this coin is $51.48
FTT token is listed on many famous exchanges including Binance, Huobi Global, CoinBene, and Poloniex:
Use cases of FTT token
FTT token was created for cryptocurrency derivatives exchange. FTT tokens are used by traders as leveraged tokens. Traders also use this token for OTC trading.
Conclusion
Token and coin are not the same thing, there are differences. Tokens are built on existing blockchain but coins have their own blockchain. The creation of blockchain requires a lot of resources, effort, and coding. So, the creation of coins is not easy at all. But tokens are built on existing blockchain that's why the creation of tokens is easier than coins. There are different types of tokens such as utility, security, equity, and non-fungible tokens.
Hello @ellipsebd, 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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