What Role Do Utility Tokens Typically Play in a Reverse ICO Structure?
Utility tokens grant holders access to a product or service within the company's new blockchain ecosystem. They are not intended to represent ownership or a share in the company's profits.
For an established company, these tokens can incentivize specific behaviors, such as network usage or data contribution. They function as the native currency for the platform, enabling transactions and rewarding participation.
This structure is often favored to try and avoid classification as a security.
Glossar
Utility Tokens
Function ⎊ Utility Tokens represent a digital asset issued to fund blockchain projects or gain access to a specific product or service within an ecosystem, differing from security tokens through their primary purpose.
Legal Distinction
Jurisprudence ⎊ Legal distinction within cryptocurrency, options trading, and financial derivatives centers on the evolving classification of these instruments ⎊ are they securities, commodities, or a novel asset class?
Reverse Ico
Concept ⎊ The Reverse Ico, within cryptocurrency derivatives, represents a structured product or trading strategy predicated on the inverse relationship between an underlying asset's price and the payoff profile.
Native Currency
ProtocolUnit ⎊ The Native Currency is the primary digital asset intrinsically associated with and used to fuel operations on a specific blockchain network, typically required to pay transaction fees and secure consensus.
Utility Token
Network Access ⎊ Utility Token represents a digital asset designed primarily to grant holders access to a specific product or service within a decentralized network, rather than representing a claim on future profits or ownership equity.