Utility VS Equity Tokens : What’s the Difference?
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The trends of 2017 and 2018 indicate that ICOs or Initial Coin Offerings represent one of the revolutions in fundraising. The ICOs have heralded themselves with so much of fanfare that it’s giving mild tremors to the very foundations of the mainstream investment ecosystem. Using ICOs, startups can raise funds by issuing tokens on blockchains. These tokens on blockchains like Ethereum are then sold to potential investors.
These tokens are tradeable and fungible, quite similar to cryptocurrencies. The difference of the token’s lies in whether the tokens grant access to a service or as equity in the company. The tokens that grant access to services are termed utility tokens and the ones that entitle you to equity in the company are called equity tokens.
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