Utility Token VS Security Token


Utility Tokens:

Most ICOs are not selling coins for the purpose of ownership in a commodity. Instead, they want people to show interest in a company without offering monetary ownership in that company.

To do this, they can provide investors utility tokens.

Utility tokens represent access to a service or opportunity a company can provide. Essentially, a utility token is like a voucher. Utility tokens are usually given away in events called TGEs (token generation events) or TDEs (token distribution events).

These are basically ICOs.

Examples of utility token distribution include Golem, which allows users to connect their computer to a specific network, enabling the energy from their combined machines to power a remote supercomputer, Golem.

In exchange for supplying computer power, people earn access to the Golem Network (GNT) – a service, not a currency.

Another example is Filecoin, which raised $257M by selling tokens that allow users access to a cloud storage platform.

Because utility tokens don’t have a specific monetary value outside of speculation and do not represent a specific monetary investment, they are not regulated – particularly in the United States.

Thus, they continue the decentralized market model that is a hallmark of cryptocurrency.