Definition ∞ Proof of Utility is a concept asserting that a cryptocurrency or digital asset derives its value from demonstrable, practical use within a specific ecosystem or application. This framework suggests that a token’s worth is linked to its functional purpose, rather than solely speculative trading. It emphasizes real-world application and integration.
Context ∞ The concept of Proof of Utility frequently arises in discussions surrounding cryptocurrency regulation and asset classification. Regulators often consider a token’s functional use case when determining its legal status. News articles and analyses often highlight projects that exhibit strong proof of utility as having a more sustainable long-term value proposition compared to purely speculative assets.
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