What are Utility Tokens

This work will help you learn about utility tokens. We have further discussed in this work the top-performing utility tokens so far in 2022 to assist the reader in making decisions on which is best for him to buy today. 

Meaning of utility tokens

Utility token is a special token issued by the developers of a particular Crypto project as a way of raising funds to support the project during the Initial Coin Offering (ICO). The utility tokens offer the holders future access to the company’s products and services, especially after the successful launching of the project. Buying Filecoin for instance, which is an important utility token, is a bit similar to buying the company’s shares in the hope of receiving dividends as the project develops. However, an important point to note here is that purchasing the utility tokens cannot be considered an investment as they are not securities. 

How to purchase the utility tokens

The utility tokens are usually purchased at lower prices during the ICO. However, one can still purchase these tokens through an exchange after they have been launched for trading. An important point to note about the utility tokens is that they cannot be purchased through mining as they do not utilize the Proof-of-work mechanisms as Bitcoin. 

Top ten Utility tokens to buy in 2022

• Binance Coin (BNB): BNB is the utility token of the world’s largest Crypto exchange today. This token can be used to access all the services offered by the exchange such as paying transaction fees and participating in token sales. 

• Ethereum (ETH): Ethereum is the most popular utility token used in creating different projects on the ERC-20 blockchain. It is used in the creation of DApps, NFTs, gaming tokens, Metaverse, etc.

• Filecoin (FILE): Filecoin is an important utility token used in paying for gas fees on the Filecoin network. It is also used for validating transactions carried out on its blockchain. 

• Enjin (ENJ): This is a popular gaming tokens that allows users to manage their assets and store virtual goods used in gaming. It is also used in minting NFTs in Metaverse.

• Axie Infinity (AXS): AXS is an utility token that is used for playing games on the blockchain. It is also used for voting on the future development of the games played on the platform.

• Chiliz (CHZ): CHZ is an important utility token used for purchasing different fans’ tokens on the Chiliz exchange. Fans can also vote for their favorite players and support the club using the Chiliz token.

• Basic Attention Token (BAT): BAT is an utility token used to settle payments between online advertisers, publishers, and readers. It is also used as an incentive for using the brave browser.

• Decentraland (MANA): MANA is the Utility token used for purchasing lands and other products in the 3D  virtual world. Holders of the MANA token can influence the activities on the Decentraland through voting. 

• Zilliqa (ZIL): Zil is the Utility token for making payments on the Zilliqa network. It is also used for purchasing products from online marketplaces. Users can also stake the coin to earn rewards.

• Solana (SOL): Solana is an important blockchain for running smart contracts. It is used in creating NFTs and diverse gaming apps.

Advantages of buying the utility tokens

• Provides a means for diversifying portfolios
• Could be lucrative if the project excels
• Offers access to the company’s products and services 

Disadvantages of purchasing the utility tokens

• There is no guarantee for profits. 
• Could result in loss of funds if the project fails. 
• Does not support mining. 
• Decision-making is dependent on the community.