What are utility tokens? Utility tokens are a special kind of virtual currency that resides on its own blockchain and give access to the specialized products or services the company is working on. This helps the company generate capital, as a fundraiser, and allows interested investors to be rewarded for their contribution.
To review blockchain terminology in short, it can be said that coins are currency, security tokens represent an investment product, and utility tokens proffer a right to use a product. As we go on, the main question would be:
What are utility tokens?
Utility tokens are not meant to be used as investments or store of value like other cryptocurrencies such as Bitcoin or Ethereum. Instead, they serve as a means of accessing and utilizing the functionalities of a particular blockchain platform. Utility tokens are often issued through Initial Coin Offerings (ICOs) or Token Generation Events (TGEs) by blockchain projects.
Utility tokens are a type of cryptocurrency that provide users with access to a specific product or service within a blockchain platform. These tokens are designed to be used for a specific purpose, such as accessing a decentralized application (dApp) or paying for transaction fees on a blockchain network.
There are three names in blockchain that may confuse many people and keep them in a shadow. The names are coin, security tokens, and utility tokens. While the names represent a value, it is not clear what is the exact difference there. So, shall we start to know?
Although the token function is more than a coin and it actually carries value, it is not considered money.
Moreover, compared to security tokens, utility tokens are less valuable because while they can guarantee investors access to some product or services, they can’t be preserved as an investment.
The main use of utility tokens is payments on platforms and nothing more.
During an initial coin offering, utility tokens are the most common tokens which are issued. These ‘golden tickets’ give holders special access to specific services or preferential treatment such as a discount at the launch of a product rather than representing ownership. This is why the tokens are not considered an investment.
There is still a chance to count on these tokens for some profits. In case the behind project suddenly becomes very popular and in demand, utility tokens can grow in value. For instance, if your utility token represents a limited access pass, and there would be still a group of people wanting the tokens, your tokens might grow significantly in value.
Just because these tokens are not an investment does not mean that they have no value at all. Many of these tokens offer exceptional opportunities to their buyers.
So be sure to pay attention to the description and conditions of each utility token you buy. Keep it in your mind that Buying a utility token is the closest thing you can get to investing directly into a crypto success story.
There are examples of utility tokens that show why such a token can be promising.
Best utility tokens of 2022
Lucky Block (LBLOCK)
LBLOCK which is based on Binance Smart Chain has utility tokens that give the owner a regular chance to participate in the Lucky Block Lottery. Moreover, utility tokens holders receive a small dividend from every prize draw. Right now, you can get your hands on LBLOCK early via decentralized exchange PancakeSwap.
ApeCoin (APE)
Apecoin as the emerging breed of NFT utility tokens offers more chances for investment. Owning these tokens allow holders to take part in decision-making about the APE NFT ecosystem. But most holders buy APE for its investment potential. Bored Ape’s collection of 9,999 NFTs has cornered the market, notching up a trading volume of almost $19m in the last weeks. The average price of a Bored Ape NFT is $394k.
Binance Coin (BNB)
The largest crypto exchange has the utility token, called Binance Coin which its holders can get a 25% trading discount while trading on Binance’s crypto market, as well as discounts in crypto staking. Regarding its importance in the crypto market, having some BNB both simplifies the transaction and can be considered an investment.
So this time, if you had the chance to buy a utility token, do not turn a blind eye to this opportunity and hit the buy button. Have you ever bought a utility token?
