The real face of Token Utility
There are a ton of tokens nowadays on the market. As of today, CoinMarketCap lists 21 922 cryptocurrencies! So what is the point of creating a new one? Do We really need so many tokens if most of them will only be created, practically speaking nobody will even know about them? Mind You, they cost real money to create and take up disc space, computational time, and energy to create. And this is where Token Utility comes in.
Technically speaking, the name Token Utility is incorrect. We should be talking about Project Utility, since the token itself doesn’t have any utility aside from storing value. All the other functionality is provided by smart contracts, blockchains, the ecosystem, people, organizations, and so on. But since the industry standard is to call it all Token Utility, We will stick to it. So just remember that whenever We or anybody else is talking about Token Utility, it most likely doesn’t mean utility of just the token itself.
What is Token Utility
Token Utility is everything that this token (project) can be used for.
The original and most basic use is a way of storing value and then the ability to exchange it with others, just like with real money but without any banks in the middle. This is basically what Bitcoin was created for.
Basic Utility
But since Bitcoin is terrible with a very large number of transactions due to its design, people have started creating alternatives like Litecoin which only purpose is to be a faster Bitcoin. So some tokens exist just to be better at some particular task than others (note: Litecoin now has confidential transactions, which can be considered yet another utility).
Ownership perks
Another well known utility comes from the simple fact of having it. An example of this would be BAYC or BORED APE YACHT CLUB. It’s the NFT monkeys that were sold and traded for hundreds of thousands of dollars. The interesting thing here is, that these simple NFTs double as a membership to a swamp club for apes (an exclusive club).
Another way to reward owners is to give them discounts, like in the case of BNB and Binance Exchange fees.
And no list of token utilities would be completed without giving the ability to vote on the future of the project for its token holders, like in the case of Uniswap.
Providing trusted source of information
Now here comes a much more interesting use of blockchain.
There is a big problem with having reliable information in the world. Especially if it comes to information that may benefit somebody more than others. Not to mention situations where big money and power are involved. But there is also a small scale, like weather conditions.
One possible solution is to pay some company to do it, but then We need to trust this company. We could ask multiple companies, but that would multiply the costs.
A different solution is to ask people to send data. They need something in return, but it can be cheaper. The important thing is to make sure that the data is accurate. The simplest way is to ask as many people as possible, then see if there are any outliers in the answers. If We take the majority answer, We can give them rewards and flag the outliers as potential liars. With this, it will be very expensive to convince the majority to lie in the same way, so We have just distributed the trust for this system as a source of data.
If You want to look more closely at how it is actually implemented (not in a simplified version like here), You should take a look at Chainlink and ccFound.
Storing data
Another potentially useful project is Arweave.
They are creating permanent data storage. If You have ever felt that history on Wikipedia is constantly changing, or some websites try to scam You by changing what is written on them, or there are documents important enough that they should never disappear, then read about this project.
The idea is to create an external online storage, where nobody can delete anything. It is not as useful for everyday life, but if somebody posts something that some people don’t want You to know about, then that creates an interesting scenario (We know that everybody only wants the best for us).
Getting paid for “anything”
The best example of another utility is BAT. Basic Attention Token.
Its core idea is to make people want to watch ads. We all know that ads generate money (or companies just pay others to market their products). But even if that is a way to pay the creators, they still are annoying. So what if You would get paid for watching those ads, and then Could send this money to Your favorite creators? Then possibly You would want to watch those ads, and then feel the satisfaction of giving rewards to others, while not spending any money.
But when taken to extremes, this could become morally questionable (see patent application 060606 for more details).
Simple conclusion
You have just read about a couple of basic token utilities (there are many others). In reality, each of them has pros and cons. And since everybody values different things, You need to decide for Yourself if a given token has a real point. But to do it properly, You first need to see many projects and learn what problem they are solving.
Good Luck!
