Utility Token

Utility tokens provide access to a product/service and/or represent the right to use a product/service or function of a project.

Utility tokens are digital vouchers that guarantee their holder (owner) access to a platform and/or the use of functions on it. Contrary to security tokens, utility tokens usually cater to a blockchain use case, e.g. a purpose-bound service.

Such could be the unlocking of certain functions or areas within a Blockchain application or app, or the authorization to redeem credits or rewards. Another difference to security tokens (which are digital securities) is that utility tokens are not allowed to contain any financial incentive according to the U.S. Securities and Exchange Commission (SEC); issuers are therefore not allowed to offer investors any kind of return on investment.

Similar terms

Token

Tokens can be described as digital units of value representing specific assets or utilities that rely on existing blockchain technology.

Payment Token

As the name suggests, payment tokens are classic cryptocurrencies that can be used as a means of payment.

Personal Token

Personal tokens (also known as social tokens) are a special form of token that allow for investors to share in the issuer's (personal) earnings.

Security Token

A security token (also "equity token" or "investment token") is a cryptographic token that is tied to a value or security.