Utility Tokens 🆚 Security Tokens : Know the Difference!

🔹Utility Tokens vs Security Tokens: Know the Difference!

In the crypto world, tokens aren’t all the same. They mainly fall into two categories: utility tokens and security tokens. Understanding the difference is key for investors and users alike.

1️⃣ Utility Tokens

• Purpose: Provide access to a product or service within a blockchain ecosystem.
• Example: Tokens used to pay for services, access apps, or participate in a platform.
• Key Point: Not designed as investments—they’re meant for utility, not profit.

2️⃣ Security Tokens

• Purpose: Represent ownership of an asset, like shares, bonds, or real estate, on the blockchain.
• Example: Tokens that give rights to dividends, profit sharing, or voting.
• Key Point: Considered investments and are regulated by financial authorities.

💡 Quick Tip:

• If it’s mainly for using a product → Utility Token
• If it’s mainly for earning profits or ownership → Security Token

Understanding this distinction helps you navigate crypto investments safely and compliantly.