Understanding The Appeal And Purpose of Utility Tokens

Disclaimer: The Industry Talk section features insights by crypto industry players and is not a part of the editorial content of Cryptonews.com.

The cryptocurrency industry has more to offer than the Bitcoins and Ethereums of the world. Utility tokens make up a crucial industry vertical that keeps gaining momentum. It appears these tokens will play a more outspoken role of importance in the years to come. 

Understanding Utility Tokens

It may seem strange to think of any token as anything other than the speculative value in the crypto space. While currencies like Bitcoin and Ethereum also gain traction for payments – although on a small scale – most other assets do not appear to serve an immediate purpose. One crucial industry vertical to watch is the utility token segment. 

Utility tokens will, as the name suggests, offer holders utility within a specific ecosystem. Additionally, some utility tokens can unlock benefits and advantages across different projects and platforms, empowering users through various means. A utility token is not considered speculative or a go-to investment option, even though it can have a monetary value. 

Issuers of utility tokens will often award these tokens to people who contribute funds to their project when it is in early development. An investor can buy these tokens to either access the platform’s benefits or unlock other use cases. However, a utility token never represents an ownership stake in the project, which explains why its value can differ significantly from a project’s success. 

Utility coins come in all shapes and sizes, spanning various projects. They all serve a specific purpose, although they are often issued in different ways. The following utility tokens are an example of how diversified this ecosystem truly is. 

Verse (VERSE)

The VERSE utility token is part of the broader Bitcoin.com ecosystem. Users can become part of this utility token’s “layer” by actively participating in the Bitcoin.com application and on the website. Moreover, the token spans multiple use cases, ranging from trading to staking, cashback to yield farming, collateral to payments, and an educational reward for those browsing insights on the platform. It will also serve as a reward-esque solution for the upcoming NFT marketplace. 

The Verse ecosystem is an addition for crypto beginners and enthusiasts to benefit from everything under the Bitcoin.com ecosystem banner. Moreover, it serves B2B purposes as it incentivizes liquidity providers on the Verse DEX and helps optimize returns. Regardless of one’s expertise in the crypto world, the token can be acquired organically by everyone who participates.

The VERSE venture secured USD 33.6 million from various top-tier investors to link utility and rewards to every step of the crypto journey for everyday people. 

Enjin Coin (ENJ)

Managing and creating virtual goods on the Ethereum blockchain has become of keen interest to builders, enthusiasts, and gamers. More specifically, the blockchain gaming and NFT industries would not be where they are today without infrastructure providers paving the way to issue such virtual goods through conventional means. Enjin’s software development kits let users easily create digital assets and integrate them into games and applications. 

ENJ, the native cryptocurrency of the Enjin ecosystem, serves various utilities. Any in-game or in-app item created on Enjin automatically has an ENJ value. Moreover, it enables developers to mint items for gaming environments by locking ENJ into a smart contract. Any items sold are destroyed, and the ENJ goes to the user who sold the item.

Basic Attention Token (BAT)

Users of the Brave browser will be familiar with Basic Attention Token (BAT). Its primary purpose is to improve the security, fairness, and efficiency of digital advertising while browsing the internet. BAT serves as a currency on the Brave platform, designed for exchange between users, advertisers, and publishers. The new way of monetizing user attention by offering them a reward when they visit an ad has proven somewhat successful.

Publishers of a digital advertisement are rewarded for user attention with BAT. A more efficient ad or piece of content will enhance the revenue for a publisher. Additionally, advertisers earn a better return on investment, as only people who are interested in their ad will actively click it. The Brave browser is an example of how Web3 will work: advertisers will only interact with users that genuinely care, and the user will be paid for their attention.

Chainlink (LINK)

The Chainlink ecosystem is designed to enable non-blockchain enterprises to connect with blockchain platforms. It is, in essence, a middleware that helps smart contracts interface with external data of any type. The LINK currency, which is the ecosystem’s utility token, is used to pay Chainlink network operators. Additionally, it is a requirement to collateralize the smart contract agreements on the network.

Chainlink’s decentralized oracle network supports various projects and protocols. Its hybrid smart contracts enable computations on-chain and off-chain, and provide enterprises with access to Ethereum, Solana, Terra, and other blockchains. LINK helps incentivize chainlink node operators to transfer data to and from blockchains securely. As this incentive exists, it is also a way to keep all node operators honest, as malicious behavior would nullify any rewards they are owed.