The power of utility tokens: How do they benefit?
Tokenization is an important aspect of blockchain technology that is allowing effective value transfer across the internet. The liquidity and fluidity offered by this concept is building a connection between products and services while resisting geographical restrictions and breaking compatibility barriers.
In recent months, security tokens have become extremely popular, and they are seen as the next big thing. Having said that, the hidden power of utility tokens is also something that cannot be overlooked. A large number of crypto token exchange platforms are offering utility tokens to crypto enthusiasts for investment, and utility tokens, too, are yielding profits for their investors. Let us gain an in-depth insight into utility tokens.
Utility tokens: creating new ecosystems
Utility tokens are growing in popularity and proving to be extremely crucial within the blockchain ecosystem. Primarily, these types of tokens exist as accessibility elements on the blockchain that they represent. Another important aspect about these tokens is the transformation that they bring to existing concepts, thereby leading to evolution of new ecosystems that empower respective participants.
Utility tokens grant token holders a right to take part in the network in a specific way. These tokens allow the holders to use the network and benefit from their services to vote on network’s governance and its update. For example, Cryptoxygen OXY2 utility token allows its users to reduce their trading commission. The fees would be as little as 0.05%. Besides, OXY2 token holders can participate in special membership programs.
Single ecosystem entities
The function of any utility token is decided by the solution provided by its parent blockchain. According to experts, utility tokens offered at crypto token exchange platforms serve a crucial purpose and exist within a single ecosystem, as opposed to other major cryptocurrencies such as Bitcoin and Ethereum. While Bitcoin is a form of payment or a store of value, utility tokens can be often used inside a single platform to cater fundamental purposes like purchasing goods or services.
Now that we have understood utility tokens, let’s read a bit about other cryptocurrency tokens.
The idea behind security tokens is that they serve as a holder of value, like a digital stock certificate in case you want to equate it to the stock market. Once the Pre ICO token sale and ICO sale are over, security tokens act as a proof that you own a part of the new cryptocurrency. Security tokens gain and lose value as the price fluctuates and as the currency becomes widely adopted.
A currency token is the one spent on various daily transactions. A common example of this type of token is Bitcoin. When Bitcoin was launched into the market, it experienced difficulty finding a real-world place where it could be used as a valid payment. However, things have changed a lot for Bitcoin over all these years. Today, a large number of retailers, such as Microsoft, Expedia, Overstock and eGifter, accept Bitcoin as a means of payment.
Asset tokens represent equity, shares or some other legally grounded assets that are based off a company’s evaluation. An example of this is gold. Instead of going to a jewelery shop to buy gold, you can go online and buy an asset token that serves as an evidence that you own a specific amount of the stuff.
The crypto space is full of a plethora of cryptocurrency tokens of different types. One of the most popular tokens offered on cryto token exchange platforms is certainly utility token. This type of token benefits both the project owners and the investors. While the project owners are able to raise required funds through their token sale, the investors enjoy huge Return on Investment (ROI) when the price of these tokens increases over a period of time. It’s a win-win situation! However, not every utility token is the same, so do adequate research to put your money into the right token that has the potential to maximize your ROI, like cryptoxygen’s OXY2 token.