Utility tokens are tokens created on a blockchain network that offer certain benefits or privileges to participants and are generally not considered investment instruments. Utility tokens, as the name suggests, provide benefits and services to token holders. They provide financial assistance and certain privileges to people who want to develop projects or own products. Utility tokens are not an investment instrument. They only serve as a ticket for access and can be used in the ecosystem in which they were created. This is why utility tokens have no real monetary value. Most utility tokens created in the blockchain ecosystem are tokens developed on the Ethereum network and designed as the ERC-20 token standard. Utility tokens help develop the network and incentivize users.

How Do Utility Tokens Work?

Utility tokens are created on the blockchain network and are unique. Utility tokens are usually designed on Ethereum with the ERC-20 standard. Users can buy utility tokens at a low price through an Initial Coin Offering (ICO). With their utility tokens, investors benefit from the services offered by the project owners in an advantageous way. Utility tokens, which have no real monetary value, consist of the property rights of companies. Utility tokens only provide access services and benefits to their users on the specific blockchain network on which they were created.

What Are the Features of Utility Tokens?

Some of the features of utility tokens are as follows:

• It is necessary to prioritize the fields of use and ensure continuity in these fields.
• For utility tokens to be bought, people must provide a tangible and definitive reason.
• There must be an economic system in which the utility token can be used.
• Utility tokens should be used as an important tool when the goal is customer access and loyalty.

What Are the Examples of Utility Token?

Some examples of Utility tokens are:

Binance Coin (BNB)

Binance Coin (BNB) is the local currency of the Binance network. Binance Coin (BNB), which also acts as a token, provides a 25 percent discount to users using the Binance network.

Zilliqa (ZIL)

Zilliqa (ZIL), which can also be used in gaming and digital advertising, is an affordable token used to build a trusted DApp for finance and NFT developers on its platform.

Basic Attention Token (BAT)

Basic Attention Token (BAT) is a token developed on the Ethereum base. Thanks to the Brave browser developed by BAT, users can earn BAT by watching ads.

Augur (REP)

Augur (REP) is a prediction marketplace where people make predictions and place bets based on real-world situations. The decentralized Augur (REP) platform rewards users who answer the results most accurately based on the accuracy of their predictions and bets.

Why Are Utility Tokens Needed?

Utility tokens are the financial instrument between projects. The created tokens serve as a resource for project owners. Utility tokens play a major role in the development of the project. Utility tokens provide users with the opportunity to benefit from the services provided by the project and access the products and services offered.

What Is the Validity Period of Utility Tokens?

Utility tokens created on the blockchain are indefinite unless another token is designed. If a utility token is to be built, it must provide benefits and services to its holders indefinitely. Utility tokens, issued as ERC-20 standard, exist forever on the Ethereum chain unless they are subsequently eliminated. For utility token holders not to be harmed by the assets they hold, the project they are or will be involved in must be sustainable.

What Is the Difference Between Utility Token and Security Token?

Utility tokens and security tokens provide completely different services. Unlike a utility token, a security token has a real monetary value. Security tokens, backed by assets such as shares and goods, are subject to securities laws. Utility tokens are used as intermediaries for services and access and are not created for investment. A company issuing a utility token is not directly linked to the token value, but the value of a security token is directly proportional to the company.