Understanding Utility Tokens

To understand **Utility Tokens **and its workings we first need to understand the economic definition of Utility. It, according to economists, is the measure of happiness, enjoyment or a sense of security that a person receives from a commodity or a service in comparison to many other commodities. Utility is basically seen as a measure of the value of one particular commodity, for various different people. In economics, it is usually assumed that an individual is rational, if utility is maximized in their care about money and life, that is to say, that if an individual chooses one particular commodity from among many such in a group, the rationality of the individual is based on whether his option out weighs the rest in propelling their satisfaction. For example: if Sarah is given a choice between having soup or salad for lunch, Sarah’s mind immediately compares the value of each of these lunch options and quickly decides to have salad, which would give Sarah the satisfaction that she’s looking for from her lunch. Do bare in mind that there is no real measurement system outside of a theoretical framework.

Now with the understanding of how Utility functions, Lets move on to the next part of the economic term (Utility Token)- Tokens, is essentially a metal coin or plastic disk that is used instead of money. (Disk, Cambridge Dictionary), or it is something that is given to someone with an intent to express an intention or a feeling (symbol, Cambridge Dictionary). For example: a token could be a piece of paper or plastic token that kids collect at an arcade or it could be a rose given to a person with the wish of expressing feelings, for them.

With the comprehension of these two units separately let’s look at how they work together to give us one key term to understand the basics of the blockchain technology and cryptocurrency. **Utility Token**, according to Decryptionary, “is a digital unit that provides exclusive access to a product or service. The utility token provides access in a way similar to a ticket providing access to a sporting event.” Unlike regular tokens, they provide the element of buildability around the existing design of the token. The values of these tokens are derived from assumptions and the willingness of a third-party buyer who is willing to buy them at a higher price than assumed. Some token programmes such as Ethereum were built in such a way that other token programmes and games could be built on top of them, XcelToken is one such token system that is built on theEthereum Blockchain, unlike many other tokens Utility tokens such as XcelToken have a ready use case, in this case (XcelToken), they can be used to book flight tickets and hotels while you are travelling or they could simply be used to buy a cuppa’ joe to take with you on the go.