Crypto Academy Season 3 Week 8 - Beginner's Course | Understanding Tokens by @kemal13

What is Token

Crypto tokens are a new way of designing open networks that emerged from the cryptocurrency movement that started with the introduction of Bitcoin in 2008 and accelerated with the introduction of Ethereum in 2014. Crypto tokens were created through Initial Coin Offerings (ICOs). By enabling the development of new open networks, crypto tokens can help reverse the centralization of the internet, thereby keeping it accessible and generating greater innovation.

The crypto token is actually a breakthrough in open network design that allows the creation of an open and mutually decentralized network that combines the best architectural properties of open network technologies. Then, it's a new way to incentivize everyone involved with an open network, including users, developers, investors, and service providers.

Difference Token and Coin

The simplest difference between coins and tokens is blockchain. Coins have their own blockchain, whereas tokens do not. Because it is created on the blockchain belonging to a certain digital currency, then you have to pay a certain fee every time you make a transaction with the token. Not only when you first create a token.

Moreover, coins are only created for the essential functions of payment and investment. However, tokens are created not only as a means of payment, but also for certain features created by creators.

In summary, here are the core conclusions of the difference between coins and tokens:

1. Coins are created from the main blockchain network. Tokens come from platforms built on top of the blockchain network.

2. Coins can be used for payment processing. Tokens are more suitable for more diverse purposes.

3. Coin creation is more difficult than tokens. Because, coins come from blockchain, while tokens only “hit” an existing blockchain.

Image Source

The FTX above is the current token after I selected it.

Image Source

When I choose above it is a coin

- Utility Tokens

This digital asset is designed as a means for users to get products or services on the platform.

A utility token represents a defined term defined by a project which can serve as a software license or a tokenized micro license wherein the predefined license terms can be formalized and define the token's functionality.

Utility tokens can be described as expected usage in a system. They often operate as access keys that tend to provide access to their systems and services and also provide a means to encourage user participation and also enable transparency in operations.

Video game arcade tokens can be thought of as utility tokens as well as basic attention tokens (BAT).

- Security Tokens

This is a representation of real assets that exist in the real world. For example, such as securities and bonds instruments.

Security tokens may come in the form of ICOs which explicitly sell security tokens for profit sharing, dividends and price appreciation and are often not available for listing on major exchanges especially for centralized ones. Security tokens tend to offer investors more legal access to crowdfunding.

It also offers investors less risk because it is required by law to be transparent. We can easily access the true value and one can easily tag these assets and have fractional holdings which leads to more liquidity.

- Equity Tokens

Equity tokens oftens retains value as long as the company is making progress. It's possible to issue tokens as non-voting shares, so you don't give out control of your company.

Equity tokens are tokens that represent ownership of an asset such as a company stock. Equity tokens are like a subset of security token. Equity tokens also known as user tokens provides user with an access to future service or product.

All equity tokens are security tokens and they represent asset ownership. An equity token implies ownership and control and most often times the ICOs are heavily regulated in some countries.
Example of equity tokens include Dao, BFToken, RRT Token.

- Non Fungible Token (NFT)

This token is a representation of a unique object and is the only one in the world.

Non-fungible tokens known as NFTs are freely validated on a blockchain innovation filling in as a mark to confirm who possesses it and that it is a unique work. It is non-fungible which implies it is one of a kind and doesn't have a like-to-like substitution very much like an artwork, or a tweet or a perhaps a 10 secs clasp of a sporting event or possibly a card. It is special and has something that put it aside feom other resource class.

Some NFTs can be actual that is to say it tends to be contacted, it is substantial like a painting or card while others are computerized like computer games or video clasp or tweets as they case might be.

- 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

FTX is a cryptocurrency derivatives exchange that offers futures, leveraged tokens and OTC trading. Currently, futures exchanges have many crippling flaws holding the space back. This mission is to solve these problems and move the derivatives space toward becoming institutional grade.

That launched FTX in April and already have among the world’s most liquid orderbooks. FTX futures have traded more than $100m per day recently, and FTX OTC has traded another $30m. The goal is to become as profitable as Bitmex and OKEx within a year.

This is not an easy feat, but they received overwhelming support from top industry players who have reaffirmed the demand for a well designed derivatives exchange. This project want to scale up as quickly as possible and build a community of strong supporters, and so that conducting a token raise for people who want to help grow FTX.

Conclusion

From this class and while getting my work done I have come to see something prominent that put a crypto coin aside from any token, which is having it's own local blockchain which a token don't yet rely entirely upon a current blockchain. Additionally I think at whatever point in question we could undoubtedly go to coinmarketcap.com and it's component there would handily permit us to know whether it's a coin or token just via looking and tapping on any resource.

Regards,

@kemal13