Utility Tokens are essential tools for fundraising, but do they play a crucial role? We discussed this with Daniele Marinelli, founder, and CEO of DT Socialize. In the landscape of large-scale fundraising operations to support projects, a distinctive player emerges, the Utility Token. These instruments function as “equity” certificates, allowing future access to a company’s products or services. However, it is crucial to understand that utility tokens are not traditional investments, and there is a lack of specific legislation dedicated to them.

According to Daniele Marinelli, an Italian entrepreneur leading DTSocialize, a fintech company specialized in providing services and the holder of the DTCoin token, utility tokens find practical application when a company decides to expand. Utility Tokens are used to secure access to the company’s products and services that are brought to market. This commonly occurs in the search for project funding and often generates significant interest from individuals hoping for substantial returns from purchasing these tokens. However, it is important to emphasize that this form of financing carries a certain level of risk.

Utility Ttokens 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 companies raise the funds necessary for the development of their various projects. 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 the entrepreneur leading a fintech services company, Daniele Marinelli (DTSocialize holding, DTCoin) explains that during an ICO, utility tokens are purchased using various cryptocurrencies or traditional currencies. Investors contribute a specific amount of money to obtain the desired tokens, which are directly allocated to them. These tokens allow buyers to access the future services offered by the project. Often, acquiring utility tokens linked to a successful project translates into significant profits for buyers.

Examples of Utility Tokens in the cryptocurrency world

Among the circulating examples of utility tokens, the Basic Attention Token (BAT) and Golem (GNT) stand out, each with specific applications in their respective sectors. For instance, BAT offers a solution to support content creators and publishers, enhancing the online user experience. The company supporting this utility token has worked on its launch to create a blockchain platform supporting these professional categories to receive better economic returns.

Thanks to this token, users will not encounter ads within their chosen content. GNT provides access to a decentralized network of computing power with the goal of establishing an economic system. With this tool, interested parties can enjoy computing power for 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 addresses this crucial issue. In particular, he explains that due to the lack of an intrinsic token appreciation 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 in the sector.

Furthermore, the lack of community involvement 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 analysis.