Difference between coin vs utility token 

When it comes to monetary transactions, people still find themselves confused about the difference in utility of coins and tokens. At an age of rapid digital progress, it is hard for people to keep up with various features and facilities that digital transactions offer. Without full knowledge of its utility, it is very hard to participate in commercial transactions through a digital platform.

Oftentimes, coins and tokens are used synonymously and become a confusion among those who are new to it. Since the world of digital currency is relatively young and still evolving. However, most blockchain industries would generally agree on the distinction that coin is cash and token is anything other than cash in monetary value.  

What is a coin?

Coin refers to physical currency such as paper notes, metal coins, but also electronic wallet or money that can be used to conduct monetary transactions through digital transactions. These currencies are issued and legitimized by the government. They are usually called fiat currencies and carry a certain value. 

It is the most common and widely regulated form of payment for purchasing any goods. Its utility and value is equivalent to money. It is a medium of monetary transfer and is the most basic unit of money. 

Electronic money is simply the coin existing in digital version and is being used for the same purpose as physical money but through online transactions. 

Utility Tokens and Its value 

Utility tokens hold value quite the same as the coins. However, unlike coins, tokens cannot be used in direct transactions. Instead, they offer the right to future assets and valuables to people who invest in tokens. In a way, one can derive access to services and products in the future through these tokens. 

Many companies use ICO or Initial Coin Offering to sell services or products to their investors. Through purchase of utility tokens, one can get access to these products or services that these startup tech companies develop to attract investors. 

For example, an utility token for Doordash can only be used for payments of your orders on doordash and nothing else. If you want to use that token for any other purpose, you would have to first exchange and acquire fiat money instead. 

Investment via security tokens

In crypto currency, security token has been in vogue for its convenient usage in the stock market exchange. Security Tokens are often used to purchase stocks. Purchase of stocks would hold the same value as these tokens would. A potential buyer or investor would acquire the same rights and value of stocks through their purchase of a tokenized version of stocks. 

Security tokens are regarded as investments and are regulated by the same rules as any investment product would be. If a company sells security tokens, then it would have to initiate a security token offering or STO. it is usually registered with financial market authority to provide the investors with additional security and safety over their investments. 

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