What is a utility token?

How is it going, dear crypto lovers? In this post, we will tackle utility tokens, aka tokens that give users future access to a product or service of an ICO. Did you know that most airdrops are utility tokens?

Have no idea what this buzz is all about? Read on.

Utility talkin’?

Haha. Actually, it’s a utility token.

Let’s start from the very beginning, shall we? To date, there are three types of tokens out there, security tokens, commodity tokens and utility tokens.

Each of these tokens are equally interesting and deserve the separate treatment. But we will start the series with the utility token of the clear blue sky.

Ready. Steady. Go.


Do you know that AirdropAlert has written the series on different token types? Check out the blog about security tokens! And if you are even more curious than that, read the one on stablecoins!


ICOs.

It doesn’t matter if you love them or hate them, you have heard of them.

Every time the company starts raising capital by selling tokens through an ICO, you should know that they sell utility tokens.

The basic function of this quantified unit of value is simple and divided into two.

First, investors buy utility tokens to fund the project.

Later, when the product is ready, utility tokens will offer investors access to the ICO firm’s product or service.

One of the multiple examples for this token genre is Filecoin, which raised $257 million through their token sale in 2017.

When the product is launched, Filecoins will allow users purchase cloud storage space, and this is how people will be able to utilize their tokens.

To make the long story short – yes, the utility tokens have got the specific utility, and this is where the token’s value comes from.

In the case with Filecoins, investors will be able to purchase cloud storage space, which is … valuable.

Why buy utility tokens?

A good question, thank you very much.

Don’t buy them if you’re not interested in a specific product.

But let’s say you can’t live without that hip storage and really like their prices. For token holders, prices are normally lower.

As for companies that issue tokens, the number of benefits is huge, but one of the biggest advantages is of course this customer momentum.

During their ICO, not only the company has accumulated the funds but also quality leads aka customers.

Guess, what? This is very important for the projects because as the project scales, the token exchange rate accelerates, driving use of the firm’s services.

And because you’re here, dear airdrop lover, you should note that many of the tokens that are airdropped in 2018-2019 are utility tokens.

Do you want to collect some utilities? Go to the AirdropAlert page with new airdrops!

***

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