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Utility token

A utility token is a crypto token that lets you use features or services within a specific project. Think of it as a digital key to a platform.

Last updated • 2 min read
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What is a utility token?

A utility token mainly has a practical purpose. For example, you can use one to pay transaction fees or access a feature in an app.

A token like this can be the native token of a blockchain network. Developers can also create a token on an existing blockchain, such as Ethereum. Smart contracts are programs on the blockchain that define what the token can be used for.

A utility token isn't intended to represent a share in the company behind a project. So, it normally doesn't give you a right to profits or ownership.

An example of a utility token

Ether (ETH) is the token of Ethereum. Users pay with ETH when they make a transaction or use an app on Ethereum.

In this case, ETH is useful because it's needed to carry out these actions on the network. That's why ETH has a utility function.

Why are utility tokens important in crypto?

Many crypto projects use utility tokens to make their services work. How much a token is used may be related to how active and popular its platform is.

News about a new project, app, or token may explain what the token is for. Look at its practical function: does it provide access, pay fees, or activate a service?

The fact that a utility token can be traded doesn't mean it's an investment or a store of value. Its main role remains its use within its own platform.

Disclaimer: This content is for informational purposes only and does not constitute financial, investment, legal, or tax advice. The information provided may be incomplete, inaccurate, or outdated and should not be relied upon as such. Nothing on this website should be considered a recommendation to buy, sell, or hold any cryptocurrency. Investing in crypto-assets involves risk of loss.