## What is a coin in cryptocurrency: understanding utility coins

When it comes to **what a coin is in cryptocurrency**, it most often refers to utility coins — digital assets that function as a ticket to the blockchain project's ecosystem. They are created in blockchain networks and distributed through ICOs, IEOs, or other issuance events (TGE). But unlike regular money, this is not just a means of payment — it is a key to access the functions of a specific platform.

### Why is this not an investment in the classical sense

The main difference between utility coins and security tokens lies in their nature. **Utility coins** are not securities. People buy them not for financial profit through dividends or value growth, but to obtain specific services. This can be access to a DApp, using features of a decentralized platform, or conducting transactions on the blockchain.

The value of a utility coin depends on one simple rule: the higher the demand for the services it unlocks, the higher its value. This is an organic process based on real usage, not speculation.

### Four key differences between utility and security coins

**1. Purpose and Application**

Security coins represent ownership rights to an asset, share, or stake in a company. The owner expects financial benefits. Utility coins, on the other hand, are simply a pass into the ecosystem, a tool for interacting with the platform.

**2. Regulatory Pressure**

Security coins are subject to strict regulation of securities. Utility coins, on the other hand, enjoy much more freedom as they are not classified as investment instruments.

**3. Source of Value**

For security coins, the value depends on the financial activity of the company, the profitability of the project, and the expectations of investors. For utility coins, it is simpler — their value is directly related to the use and demand for the functions they unlock.

**4. Risk Profile**

Holders of security coins take on financial risks: market volatility, regulatory issues, declining profitability. With utility coins, the risk is different — the value may drop if the demand for the platform's functions decreases. But this is not a financial bet; it is the risk that the service may become unwanted.

### How does it work in reality

Imagine a platform where utility coins are used to pay fees, access premium features, or participate in governance. As the service becomes popular, the demand for coins grows, and their price increases naturally. This is not speculation — it is the economy of supply and demand in action.

The main function of utility coins is to ensure effective interaction between users and decentralized applications and the entire blockchain ecosystem. They simplify transactions, control access, and support the internal economy of the project.

### Final thought

Understanding what a coin is in cryptocurrency and how utility coins work is critically important for working with the blockchain ecosystem. They are not financial instruments in the classical sense, but functional elements of the decentralized world. The difference between utility coins and security coins determines not only their usage but also their regulatory status, risks, and potential applications in cryptographic networks and blockchain applications.