The Myth of Utility Tokens


Today, there are over 250,000 tokens in existence, most of them claiming to be designed to be utilised in some kind of a transaction - be it exchange fees, online casino spins, or whatever you can possibly imagine. Obviously, not all 250,000 are actively used. Quite a few of them are simply experiments, or tests, or parts of half-baked or closed projects. But did people really need all those utility tokens?

Of those 250,000 tokens, very few have any other function than replacing fiat money. Take stablecoins for instance. Not only they are only used as means of payment, but they claim to be backed by real fiat money. Why do we need DAI, TAI, MAI or whatever name the creator of such a stablecoin comes up with? Especially when their value is pegged to the Dollar, or Euro or Pound [email protected]@ing Sterling? None!

It's not that the protocol does not allow other functions than exchange of value and transfers. It does. But there is no commercial or commercially viable use, other than replacing fiat money in some kind of a transaction. Take BAT for instance. Could Brave browser exist without BAT? It sure could! Brave browser's referral programme is expressed in US Dollars, despite paid in BATs. Its rewards system could easily be expressed in cents, or US Dollars. Tipping could easily be done in cents, or US Dollars. Same use system, different monetary system.

Now imagine a reward, tipping, or system used in Brave browser that could not be exchanged for fiat money or any other token that could lead to exchange with fiat money. Would you be interested to participate? We would bet on no. Would you be downloading Brave just for its privacy features and speed? Some of you, might. Most of you, not.

Moreover, would you buy any 'Utility' Token, if it wasn't traded in an exchange market? Would you earn rewards in an un-tradable token, that you could only transfer to someone else? Of course not! 99% of people want to hold tradeable tokens, that their value expressed in fiat money will increase through trading.

Wait a minute there! Isn't that an investment/asset token, then?

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