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Utility token is defined as a digital unit that provides exclusive access to a product or service. The utility token provides access in a way similar a ticket providing access to a sporting event.
Similar to a token in a kid’s arcade, utility tokens are designed to provide access to a system. Unlike coins or currency, they are not designed as a store of value. Instead they have programmable potential built in. In other words, utility tokens are designed so programmers can build software around or in them and users can interact with the software using the tokens.
Some tokens like Ethereum were built so that other cryptocurrencies and tokens could be built on top of them. OMG is a cryptocurrency built on Ethereum. There are games and productivity apps also built using Ethereum’s token. EOS is another token built using its own system, independent of Ethereum.
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