Utility Token

A unit of currency consumed in a process. For example, an arcade token that gets used when a game is played or a coin like BNB Binance token, which is used to pay exchange fees.

A utility token refers to a cryptocurrency or crypto based token that serves some purpose beyond speculation. 

Bitcoin cannot necessarily be defined as a utility token, partly because it’s a coin rather than a token but mostly because it’s used for speculation. 

Gold is an interesting comparison to Bitcoin, because though the metal has utility and can be used in circuits, jewelry, and other ways -- the vast majority of gold is used for speculation and hedging against economic turmoil. 

In the cryptocurrency space, a utility token provides value not only in its ability to rise and fall in terms of monetary value, but also in what it can do. 

Some exchanges created their own cryptocurrencies and marketed them as utility tokens because the tokens could be used to lower fees on their exchanges. Other utility tokens might secure smart contracts, send signatures digitally, and help complete many other tasks. 

As you begin your journey into cryptocurrencies, make sure to investigate utility tokens, since a rare few might in fact progress to become useful around the world one day. And keep in mind that they differentiate themselves by being not only about speculation. 

Privacy coins are one type of utility token that blurs the lines because speculation and actual utility. Privacy coins offer the utility of shielding your transactions from prying eyes while also offering speculation that they may rise or fall in value as the world pays attention to their need for financial privacy.

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