What Is The Difference Between Utility Token And Security Token

Cryptocurrency is becoming a familiar concept to many of us. Despite much wider acceptance and the media releasing the cryptocurrency-related articles on the daily basis, some people still feel confused with the terms. For example, what are coins and tokens? You may laugh at our very basic example, but it indeed can be problematic for a beginner to understand the difference.

The difference between utility tokens and security tokens is a much more advanced field. In this article, ChangeNOW, a leading non-custodial cryptocurrency exchange, will try to help the users to make sense of these two token types.

So, let’s start with the basics. What is a crypto coin? A coin uses its own platform and is independent — they do not require external platforms, as they have their own blockchain. BTC, LTC or ETH are coins. Tokens, on the other hand, sit on somebody else’s blockchain — for instance, Ethereum. There are thousands of tokens available on the market now.

There are, however, two type of tokens — Utility and Security. This is exactly where the confusion starts. You can read more on the differences between these two in our latest blog post.