{"id":6683,"date":"2020-01-18T12:42:48","date_gmt":"2020-01-18T12:42:48","guid":{"rendered":"https:\/\/qa-front.dev.techhub.cloud\/blog\/?page_id=2956"},"modified":"2024-04-17T12:25:11","modified_gmt":"2024-04-17T12:25:11","slug":"what-are-utility-tokens","status":"publish","type":"glossary","link":"https:\/\/paybis.com\/blog\/glossary\/what-are-utility-tokens\/","title":{"rendered":"Utility Tokens"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">In a world where Blockchain technology and cryptocurrencies continue to inspire innovation; utility tokens are becoming worthwhile investment options. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">But for someone new in this space, the big question remains &#8211; what are utility tokens and how they differ from other types of tokens?<\/span><\/p>\n<p><span style=\"font-weight: 400;\"> Read on to learn more.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What Are Utility Tokens?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Utility tokens are digital assets that you receive after investing in a new blockchain application or a project. These tokens allow their users to purchase items or services present on the token issuer&#8217;s website.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">How Are Utility Tokens Different From Security Tokens?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The main difference between utility tokens and security tokens is their purpose and intended use:<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"><strong>Utility tokens<\/strong>, allow users to use their newly-acquired coins to make purchases within the token issuer\u2019s platform. Therefore, utility tokens are not necessarily a long-term investment, but rather a token for everyday usage.<\/span><\/span><\/span>For example, a new startup can create utility tokens and sell digital coupons for the services or products it is developing. They can also offer significant discounts to individuals that wish to use their native token as a form of payment.<\/li>\n<\/ul>\n<ul>\n<li><span style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"><strong>Security tokens<\/strong>, on the other hand, represent investments. Token holders receive dividends in the form of tokens whenever the company issuing the tokens earns a profit in the market.<\/span><\/span><\/span>The token holders are also shareholders of the company. Thanks to blockchain technology, these users are able to vote and have relative control over the company\u2019s decision-making process.<\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">How Can I Invest in Utility Tokens?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">While utility tokens are a relatively new model in the <a href=\"https:\/\/paybis.com\/blog\/what-is-blockchain\/\" target=\"_blank\" rel=\"noopener noreferrer\">Blockchain<\/a> industry, investing in them is pretty simple.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">After the tokens are issued, a portion is awarded to the creators in a <\/span><a href=\"https:\/\/tokenmarket.net\/what-is\/pre-mine\/\"><b><i>pre-mining<\/i><\/b><\/a> <span style=\"font-weight: 400;\">offering (usually locked by smart contracts). Another portion is sold to users\/investors through a <\/span><i><span style=\"font-weight: 400;\">crowd-sale<\/span><\/i><span style=\"font-weight: 400;\"> process.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The process is very similar to <\/span><i><span style=\"font-weight: 400;\">Initial Coin Offerings (ICOs)<\/span><\/i><span style=\"font-weight: 400;\">. Purchasing utility tokens is crowdfunding a tokenized development\/project.<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When you invest in utility tokens, you gain exclusive access to the digital project\u2019s platform. You can compare an investment in utility tokens to funding the development of shared infrastructure through an Initial Public Offering (IPO).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">After you buy tokens using your preferred form of payment, you become an investor in a project or user of an application under development.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Utility tokens are digital assets that you receive after investing in a new blockchain application or a project. These tokens allow their users to purchase items or services present on the token issuer&#8217;s website.<\/p>\n","protected":false},"featured_media":0,"template":"","glossary_letter":[300],"glossary_term":[277,279],"class_list":["post-6683","glossary","type-glossary","status-publish","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Are Utility Tokens - Blockchain FAQs Answered - Paybis Blog<\/title>\n<meta name=\"description\" content=\"In this short article we explain what are utility tokens and how these are used by their investors. 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