For knowledge sake, it is important to know that utility tokens are usually dependent on the blockchain of cryptocurrencies. They are totally different from cryptocurrencies. Hence cannot exist without the blockchain tech of a cryptocurrency. The blockchain protocol that allows the possibility of creating utility tokens is usually referred to as a decentralized platform for applications. These applications are meant to run as programmed without any room for contract fraud. Some of the blockchain networks that powers these tokens include but not limited to ethereum; Neo, and Knowchain, etc.
Meaning of Utility Token
Utility tokens which are also known as app or user tokens, are tokens that serves as a medium of exchange for goods and/or services between users of a particular platform or community. Utility tokens allow platform users the to access a product or service. Unlike security tokens (STO), utility tokens do not command any form of extrinsic financial value, but its value lies within the platforms in which they service. This means that for one to price any utility token as high as a cryptocurrency, then the demand for the utility in which the token serve is also high, or the developers of the tokens have made effort to reduce the circulation of such tokens. Examples of utility tokens include: savedroid (SVD); Sirin Labs (SRN); Storiqa (STQ); BAX, etc. These mentioned tokens are based on the ethereum blockchain.
How Does Utility Tokens Work?
Just as mentioned above, utility tokens are used to power a platform, and the demand for the tokens will grow as more people continue to use the platform. In order to understand how utility tokens operate, I would demonstrate with the first utility token mentioned above – savedriod.
Savedroid (SVD) token is the token that fuels the savedroid savings app so that users of the app can be able to enjoy the services that the application offers. Therefore as new users start saving smartly using the SVD app to achieve their saving needs daily, the value of the SVD token will raise continuously in price value, while demand also continue to rise.
In conclusion, make a choice to buy and Hodl some of these utility tokens like Savedroid (SVD), so that when the crypto market becomes bullish, you will be well positioned for gains.