Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency, as the system works without a central bank or single administrator. The network is peer-to-peer and transactions take place between users directly, without an intermediary.
These transactions are verified by network nodes through the use of cryptography and recorded in a public distributed ledger called a blockchain. Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto and released as open-source software in 2009.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment. Bitcoin can also be held as an investment.
According to research produced by Cambridge University in 2017, there are 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.
Bitcoin is a digital asset designed to work in peer-to-peer transactions as a currency.[5][129] Bitcoins have three qualities useful in a currency, according to The Economist in January 2015: they are “hard to earn, limited in supply and easy to verify”.
[130] Per some researchers, as of 2015 bitcoin functions more as a payment system than as a currency.[31].
A utility token is a digital asset that has utility within its ecosystem but doesn’t confer ownership or voting rights like equity or security tokens do. Utility tokens power decentralized applications (dApps) built onblockchain networksand are often used to purchase goods or services within those networks.
Common examples of utility tokens include filecoin (FIL), which can be used to buy storage space on the Filecoin network; Kin (KIN), which can be used to purchase digital goods and services within the Kik messaging app; and Dai (DAI), which can be used to pay for fees on the Maker decentralized exchange or used in other Ethereum applications.
Security tokens are digital assets that confer ownership or voting rights in a company or other asset and trade on regulated exchanges like traditional stocks and bonds. Security tokens may also provide holders with access to profits, such as through dividends, or give them voting rights on major decisions affecting the underlying asset. Security tokens are subject to federal securities lAWS in the U.
S., which requires issuers to register their offerings with the Securities and Exchange Commission (SEC).
So, is Bitcoin a utility token or security token?
Bitcoin is primarily a utility token, though it does have some characteristics of a security token. It is not subject to federal securities lAWS in the U., but it is often traded on exchanges like traditional stocks and bonds.