Cryptocurrencies hold value and can be bought or sold, but this isn’t where things end.
There are many categories that a crypto can fall into, one such category being utility tokens.
So, what is a crypto utility token, and what is its purpose?
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What Is a Crypto Utility Token?
A crypto utility token goes beyond store-of-value alone.
This is the core purpose of utility tokens.
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In a sense, you could consider utility tokens something of a marketing tactic.
It’s important to remember that utility and security tokens are not one and the same.
While utility tokens act as an incentive, security tokens offer investors an actual stake in a company.
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They’re essentially proof that an investor owns part of the company in question.
They’re more like access codes or vouchers than anything else.
There’s also a notable difference between utility and governance tokens.
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Governance tokens are solely used to vote on a internet’s decisions and direction.
BNB was created and issued in 2017 during Binance’s initial coin offering.
At the time, 20,000 BNB had the same value as 1 BTC, or 2,000 ETH.
Since then, Binance Coin’s price has risen, and 1 BNB is now worth over $300.
Basic Attention Token (BAT)
Basic Attention Token is anERC-20 tokendeveloped on the Ethereum blockchain.
BAT is used to track usage time and surfing habits on theBrave online window.
Alternatively, BAT holders can give their favorite content creators some funds within the Brave internet tool.
Remember the governance tokens we talked about earlier in the article?
Zilliqa also has a governance token, known as gZIL, which exists separately from the ZIL utility token.
Are Utility Tokens Risky?
During thecryptocurrency ICO boom, new projects appeared daily, with hundreds being scams.
Ethereum’s biggest downside is its gas fees, which can get pretty hefty.
There areways to reduce your gas fees, but none are guaranteed to work all of the time.
Lastly, utility token holders do not have any say in what happens to the company.
Security tokens can offer this, but never utility tokens.
