The Fundamental Principles of Utility Tokens

Tokenization is an aspect of blockchain technology that is enabling the effective transfer of value across the internet. The fluidity and liquidity created by this concept helps to connect products and services while defying the restrictions of location and continually breaking the barriers of compatibility. A class of token that is growing in popularity and proving to be very essential within the blockchain ecosystem are ‘Utility Tokens’. These class of tokens primarily exist as accessibility elements on the blockchains that they represent. A more interesting concept about these tokens is the versatility that they offer by revolutionizing existing concepts, creating new ecosystems that empower the participants therein. The CEO of Never Stop Marketing, Jeremy Epstein explains to CCN that Utility tokens confer a right on the holder to participate in the network in some way. Such tokens may give holders a right to use the network and take advantage of its services to vote on the governance of the network and its upgrade. For example, a decentralized Uber token might give you the right to take a ride whereas an ARK token gives you the right to vote on the direction of the protocol via its delegated proof-of-stake model (DPos). This is different than a security token where you earn income just by holding.

Reference: https://www.ccn.com/fundamental-principles-utility-tokens-blockchain-ecosystem/

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