Utility token
A utility token grants access to a service or a network, similar to an admission ticket or prepaid credit.
Explained simply
Many blockchain projects issue tokens you need to use their services: book storage, call up computing power, pay fees, vote. That is a utility token.
It is not a security and certifies no stake in the project. Its value depends on whether the underlying service is in demand. Legally the distinction from a security token matters and is not always clear-cut.
From the familiar world
The tokens at the car wash or the credit on a canteen card: they are only worth something where the service is offered, and they give no stake in the company.
An example
In a decentralised storage network, users pay for storage with the network token and providers receive the token as compensation. The token is the internal unit of account.
Why it matters
The question "Is this a utility or a security token?" determines regulation and investor protection. It is also a good test of whether a project actually delivers a service or merely sells a token.
To pass on
„A utility token is the admission ticket to a network, not a stake in it.“
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