Crypto Academy / Season 3 / Week 8 - Homework Post for [@reminiscence01]: Understanding Tokens / by @preye2

Hello All,

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Coins and Tokens are two different words that are constantly used in crypto, they can seem interchangeable but there are not, infact there are two different types of cryptocurrencies. So I will be writing extensively on the two different types of cryptocurrencies.

NUMBER 1

What is a Token?

Token in general is something that is created, and in respect to cryptocurrencies, it's created on Blockchain (most on Ethereum). It is a representation of something in a particular ecosystem, and equally meant to be used within their projects ecosystem.
So token is referred to as a cryptocurrency that doesn't have it's own blockchain, but Instead it exists and runs on an existing coin.

• Ethereum Chain = ERC20 -> Chainlink
• Binance Chain = BEP2 = BUSD
• Cardano Chain = ERC 20 Ada
• Ethereum Chain = ERC20 = OmiseGo
• Binance Chain = BEP2 = PancakeSwap

As you can see above, here are the list of 5 Tokens in Cryptocurrency.
1. Chainlink: It is built on the Ethereum blockchain.
2. BUSD: It is built on the Binance Smart Chain ecosystem
3. ADA: It is built on the Cardano Chain
4. OmiseGo: It is built on the Ethereum blockchain.
5. Pancakeswap: It is built on the Binance Smart Chain ecosystem

NUMBER 2
The Differences between a Coin and a Token

What is a Coin?

As in respect to crypto, a Coin is a cryptocurrency which operates independently of any other platform. In other words, coins are stand alone cryptocurrencies that do not need another platform to run.

• Examples of coins includes Ethereum, Bitcoin, Litcoins, Dogecoin etc
• Coins are usually created through Mining

While

Tokens on the other hand, requires other platforms such as NXT, Waves, Ethereum and so on to exist and operate. They are actually built upon other platforms, which they exist on.

• Examples of tokens includes Tether, chainlink, Ada, PancakeSwap etc.
• Tokens are created through Initial Coin Offering
  

NUMBER 3

They are various types of cryptocurrency tokens, and in most cases they are built for various purposes, and are uniquely describe by the way they serve their users. Some tokens could as well exist in so many other different categories at a time. So below are explanation of some tokens and their features.

• UTILITY TOKENS: This refers to something that provides a user with a service at discount rates. It usually gives future access to a company's service. They can be regarded as future digital coupon.
  These tokens are not really investments, but getting them could lead you to having access to the project product.

Some of the features of security tokens includes:

• The sale of tokens are not under regulations,

• There are no guarantees that profits would be made

• SECURITY TOKENS: This refers to a token that is a representative of a legal ownership of an asset which is verifiable on a blockchain. So the true value of a security token is in it's ability to regularize authorities in the ownership of assets. In other words this represents legal ownership of assets, and are subjected to many regulations.
  The security token requires alot of KYC, documentations, auditing and so on, and in most cases, It's usually a proof-of-stakes asset.

Some of the features of security tokens includes:

• Investors are protected because of the securities and trading regulations

• the tokens are usually expected to appreciates in value because of the activities performed

• they exist through smart contracts and blockchains,

• The market of the token is usually less volatile.

• EQUITY TOKEN: Some how like security tokens, equity tokens usually represents ownership of an asset, such as company stocks and debt. This token could be profitable when companies wants to buy physical products.
  This token equally implies ownership and control, and the ICO's are regulated in some countries.
  Some of the features of security tokens includes:

• It is equally regulated by security laws which guarantees investor's protection.

• It's a bridge between blockchain and existing business.

• NON-FUNGIBLE TOKEN: This is a type of token on a blockchain that signifies only one asset. It can represent items such as videos and pictures.

Some of the features of security tokens includes:

• It can't be divided into smaller pieces
• It is stored in the blockchain through a smart contract which means it can't be destroyed.

NUMBER 4

My Research on the Pancakeswap token a project on the Binance Smart Chain

This is a super hot token built on the Binance Smart Chain that uses liquidity pools for token swaps. They are regarded as the crown jowel of the Binance Smart Chain ecosystem.
You can used it to swap your bep20 token in the Binance Smart Chain. It can equally be used for other DeFi stuffs like yield farming and so on.
One unique feature about Pancakeswap is that it gives Initial farm offerings, as well as lotteries to users.
The biggest reason for the existence of Pancakeswap is that you can use it to swap token really fast and cheap compared to uniswap. And a Decentralized Exchange (DEX) is the most popular feature of pancakeswap, as you can swap between hundreds of different tokens.
You can supply liquidity to various pools to get back profits by using those farm cake tokens to get yourself some very high APR.
Pancakeswap has this CAKE token that which can be used for swaps, staking, yield farming, and entering of lotteries in the platform.

Here are some new stuffs on Pancakeswap

• Initial Farm Offerings (IFO): When new tokens are been added to the Binance Smart Chain ecosystem, some of these IFO will be allocated as rewards.

• The Cake Lottery Feature: Here you can purchase tickets with cake tokens and when some of the numbers matches then you get a reward.
  

Conclusion

So many traders interchange and misunderstand the concept of Coins and Token. So this lecture is really a very important one because has broken down all we need to know about tokens.
This is really an educative lecture and I thank prof. @reminiscence01, for bringing this topic to us this week.

Thank you for your time.