Crypto in 5 Minutes: Utility Tokens
Introducing crypto-consumables
Note: In this and following articles, I will be writing condensed notes on cryptocurrencies both as a form of personal note and to aid other beginners.
What’s the deal with crypto debit cards?
The MCO Visa Card, for instance, gives cashback in the form of Crypto.com Coin (CRO) tokens.
Do these tokens have any value? Let’s find out.
What is a utility token?
Usually sold in an Initial Coin Offering (ICO), it represents a claim or access to a part of the company’s good, service or network. You cannot use it anywhere else.
Compared to stablecoins, they are volatile.
How do we value them?
From our definition, it is reasonable to assume a token’s price grows with the usage of its network.
There are different models to value each type of utility token.
Some argue that due to its high turnover (or velocity), it is hard for tokens to grow in value.
Risks
Price volatility
Beware of scams