Greetings to all the great and wonderful people on Steemit and special regards to all the members of SteemitCryptoAcademy this is the second week of the Crypto Academy Season 2 and I am happy to be a part of these lectures.

Today I will be doing my submission for the homework given by professor @pelon53 after his lecture on the subject Tokens -Part 1.

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TOKENS

Introduction to tokens:

In general, a token is an article or entity or any thing that is symbolic of something else or another entity, be it physical or abstract.
Tokens have been in existence long before the arrival of Blockchains and Cryptocurrencies. Tokens originally were items and in most cases vouchers that were symbolic of actual legal tenders, but they on their own are not legal tenders.
They were used in place of actual money, most times making it easier to carry around huge sums of money by just holding a single token, but then, they are only recognised and accepted within a certain society or institution.
For instance a casino chip is a token and it represents actual money used for betting and gambling, but it can only be used within the same very casino where it was created.

In the same way, a crypto token is symbolic of a value or an asset within a given blockchain and they have a peculiar or defined utility within the blockchain and can only be used within that particular blockchain eco-system wherein it was created.

Source

Types of token:

There are different types of token, but for the purpose of this work, I will be looking at three different types of token:

SECURITY TOKENS:

These are tokens which are issued in return of an investment into the Blockchain, where the investment is a common enterprise and there is an expectation of profit from the investors.

Security tokens gives the investors a stake in the organisation or company launching the token, this could be in the form of assets, shares, etc. In fact in the layman language security tokens in most cases serve the same purpose as bonds.

Security tokens are subject to and governed by federal laws and this is usually to protect the investors and their investments.

Security token is more like an investment contract which is legally binding and represents ownership of an asset be it either physical or digital assets.

Advantages of Security Tokens:

• Trust:

Storing or keeping assets on a blockchain is safer, hence since security tokens are on blockchains permanently, they are fully traceable no matter how old it is or how many occasions it has changed hands.

• Fractional Ownership:

Security tokens gives room for fractional ownership. For instance it might be very difficult for one person to own a gold coin, but then with security token so many persons could own little fractions of the same gold coin.

• Global adoption:

Being an investment and also being protected and regulated by federal laws, security tokens are becoming more globally accepted.

An example of Security token is the BCAP.

Source

BCAP as a security token:

BCAP is a security token launched by Blockchain Capital. Blockchain Capital launched their first security token in April 2017, and they sold 10million tokens at $1 and raising $10million in the process.

As at today, BCAP is selling at over $15 and can be purchased on the Open Finance exchange.
Blockchain Capital has the mission of helping entrepreneurs build world class companies based on Blockchain technology.
They help in financing companies and so far they have financed over 90 companies. And BCAP tokens gives holders of the token a portion of the profits earned from the fund.

EQUITY TOKENS:

This is a type of security token, but they are a special type of token that serves or basically works like a traditional share in a company.

Equity tokens get their value from the company's success or failure as the case may be. These tokens gives the holders the right to ownership of a percentage of the company and the company's profits/losses and also gives them a right to vote on the company's future.

Equity tokens could be said in ordinary man's language to be a digital version of traditional shares stored on the Blockchain.
An example of equity token is the Recovery Right Token (RRT).
RRT is a digital token that was issued by Bitfinex Group as a means of recouping the losses the sustained in August 2016 after a theft of their assets. RRT gives their holder a stake in Bitfinex Group.

UTILITY TOKENS.

A Utility token is a blockchain based token which is used to fund the development of the blockchain/cryptocurrency and this can later be used within the blockchain eco-system.

Utility tokens are versed and are used for different purposes within the Blockchain eco-system. Unlike Security tokens that are bought as an investment with expectations of a return on the investment, they are rather bought for use within the Blockchain eco-system as they have their functionality embedded into them, and so they have different functionalities.

An example of utility token is the Basic Attention Token (BAT)

The Basic Attention Token (BAT) was created by Branden Eich in order to improve the security, and efficiency of digital advertising through use of Blockchain backed technology.

It is the driving token of the Brave Web Browser and is built on the Ethereum network.
Currently the BAT token is worth about $1.02 today with over 1.5billion tokens in circulation.

CONCLUSION:

While tokens differ from cryptocurrency, gradually they are becoming popular and being peculiar and making inroads in different areas they might be very much globally accepted in the nearest future.

Cc:
@pelon53
@steemitblog
@steemcurator01
@steemcurator02
@steemcurator03
@steemcurator04

Until I come your way next time
I am @the-patriarch
THANKS FOR READING