Utility Tokens are the essential tools for fundraising? We discussed this with Daniele Marinelli, founder and CEO of DT Socialize.
An in-depth look at Utility Tokens
In the landscape of large-scale fundraising operations to support projects, a peculiar protagonist emerges – the utility token. These instruments play the role of share certificates and allow future access to a company’s products or services. However, it is crucial to understand that utility tokens differ from traditional investments, as there is often a lack of specific legislation dedicated to them.
According to Daniele Marinelli, an Italian entrepreneur leading DT Socialize, a fintech company specialized in providing services and the holder of the token, utility tokens find practical application when a company decides to issue coupons. These coupons condition access to their services. This strategy is common in seeking funding for projects and often generates significant interest and speculation. However, it is important to emphasize that this form of financing comes with a certain degree of risk.
Utility Tokens meet Initial Coin Offerings (ICOs)
In the world of cryptocurrencies and blockchain technology, utility tokens are often associated with Initial Coin Offerings (ICOs). These represent a means through which cryptocurrency projects raise funds for their development. The entire process begins with the decision to launch an Initial Coin Offering (ICO), where utility tokens are announced as a vehicle for project financing.
As an entrepreneur leading a fintech services company, Daniele Marinelli (Ushare, DTSocialize, DTCoin) explains that during an ICO, utility tokens are purchased using various cryptocurrencies or traditional currencies. Investors contribute a certain amount of money to obtain the desired tokens, which are then assigned to them directly. These tokens allow buyers to access the future services offered by the project. Often, the value of the Ushare token is a utility token that, from a successful project, translates into substantial profits for buyers.
Examples of Utility Tokens in the cryptocurrency world
Among the examples of utility tokens in circulation, the Basic Attention Token (BAT) and Golem (GNT) stand out, each with specific applications in their respective sectors. BAT, for example, offers a solution to support content creators and publishers, improving the online user experience. The company supporting this utility token has worked on its launch to create a blockchain platform that supports these professional categories, allowing them to receive better economic returns.
Thanks to this token, users will not encounter advertising within selected content. GNT provides access to a decentralized computing power network, aiming to create an economic system. Thanks to this tool, interested parties can enjoy computing power to perform various tasks. The presence of a decentralized network facilitates the process.
Challenges of Utility Tokens: risks and limitations
Despite the advantages, utility tokens also present several challenges. Through his blog, Daniele Marinelli specifically addresses this crucial issue. In particular, he explains that the lack of an intrinsic value-increasing mechanism, the risk of zero value in case of project failure, and the limited promotion of cryptocurrency adoption are just some of the most significant challenges to face in the sector.
Furthermore, the lack of community engagement and the limited decision-making capacity of token holders represent additional critical points. The liquidity of utility tokens can be problematic, especially if the project fails to raise the necessary funds for its development, concludes Daniele Marinelli in his in-depth analysis.
