Issuing utility tokens is a dead end

“The thing that annoys me in the industry is: when you go to the well-known site Coinmarketcap.com and you see in its listing all these hundreds of Coins, you think that they are about the same thing and carry about the same functions. But this is wrong, and misleading many newcomers to the market, and also creates the effect of deceived expectations. Remember: not all tokens are born equal.

And one more thing that we have to accept before we go into details: tokens do not represent anything new and unique. ”


Thus, Lasha Antadze, the founder of Shelf.Network, an auction on the blockchain, began his speech at our conference in Georgia. In 2018, this startup won several prestigious competitions, and now moved to Berlin and launches a pilot project. But Lasha was known in the blockchain environment much earlier due to the development of e-Auction (decentralized auctions for public services) and his position that the blockchain would effectively fight corruption.

Lasha told about the types of tokens and why it is wrong to allocate utility tokens into a separate functional type. The speaker spoke English; under the cut - in Russian decoding.

We conducted Blockchain & Bitcoin Conference Georgia for the first time. The conference turned out to be intense and lively: three hundred people attended it, and among the speakers were PwC representative Katharina Geiselhart and partner of the law firm CKR LAW LLP Gordon Einstein.

Analogs tokens in the physical world

Tokens exist since commerce exists; since some people started trading with others. Their main task is to give specific information about a certain value of an asset and present it in physical or digital form. In general, the main thing - to show the value of this thing. But it does not have to be a physical thing.

As an example, I will give the first tokens with whom he met in life.


This is part of my childhood and school years: pokemon chips. I think many of you had these, and in fact these were my first tokens. When I think about the value they represented, I understand that it was something like a personal rating system in our school. If you played chips well and collected a large set - at my school you were a cool guy. And this again tells us that tokens do not necessarily represent tangible, physical values.

Analyzing how the blockchain has changed and how tokens have become digital, we will understand why cryptocurrency has not yet replaced dollars and lari and why each of us still does not use the blockchain in everyday life.

There are three main problems inherent in physical tokens. Firstly, limited trading ability. Our chips were paper based, so it was difficult to create liquidity and trade them over long distances. We could only afford the school-house range.

Secondly, the chips were easy to fake.

And the most important problem: somewhere in China there was a printer that produced and produced new ones. And if someone bought and brought a lot of chips to our school and put them into circulation, it would destroy our entire personal rating system.

Blockchain solves all three problems. It offers an accounting system that is protected by digital identification of participants. It allows you to digitally represent any value. And the most important, revolutionary thing - it provides for collective distributed management. This means that you can not be afraid of the Chinese printer: the number of tokens is under our control, and their circulation is transparent.

Hence the situation that develops with ICO and representative tokens. A system is being created that we blindly trust on some mystical level. It seems to us that anywhere in the world we can reduce the bureaucracy with the help of the blockchain, and that the main part of tokenization is to provide greater liquidity.

Three types of tokens: currencies, commodities and securities

All blockchain ecosystems that are being created today are being created to increase liquidity. Therefore, to the question whether everything around us can be tokenized, the answer will be: yes, most things. I would divide all their tokens into three main groups. These are currency tokens, commodity tokens and financial instruments (securities).

Let us examine these three directions in more detail.

Currency tokens can be divided into two subcategories. One completely decentralized and unregulated is what we call cryptocurrency. But we can also come to the issue of centralized coins issued by central banks or, if the matter goes further, by large companies. This type of tokens will represent the existing monetary system or, according to libertarian theory, they will be provided with real goods. Perhaps some other, experimental monetary system will be used.

I strongly doubt that in the near future there will be a single decentralized cryptocurrency in the world, since even Bitcoin is not suitable for this role now. It is not widely known and used, it is difficult for a poet to evaluate products and services directly in Bitcoins. Among the rest, cryptocurrency is also not something like that.

Now let's move on to the second cluster — product tokens. I think that despite the fact that Bitcoin and cryptocurrency are now the most famous, product tokens have much wider potential, because they unite two worlds. We will have physical tokens that will be associated with physical objects, and a completely new sphere will emerge: digital collection objects on the blockchain.

An example that already exists today is the Cryptochos. I consider them the best invention of the last year in the blockchain sphere, because they open up a whole new market and allow you to explore a new field of application for the blockchain.


If bitcoin is considered only as a medium of exchange for goods, then any cryptocurrency can be in its role. This is very similar to the old economic system.

The third direction is securities. Personally, I believe that securities, like all other types of agreements with investors, will be tokenized. I do not think that there will be two laws: the traditional securities, which are regulated, and the electronic ones, which are circulated according to their own rules. I think that we will find a balance, and tokenization will help improve the process of circulation of securities.

“Utility tokens do not exist”

Of course, now you have a question where in this system are utility tokens. And I will answer: if you look from the point of view of functionality and accountability, then there is simply no such thing as utility tokens. Yes, they are useful for raising funds. But if we look at the functionality in the long term, we will understand: every startup that releases these tokens, at some point will begin to use them as currency. Of course, if it becomes functional. An example is Ethereum, where the internal currency of the platform for ICO has become units of its own value.

But for most projects, the domestic currency that runs at the application level is a dead end. I think that’s why many young companies finish their work: they don’t understand that their projects are like a central bank in a small closed ecosystem, without regulation and stabilization.

I think that when HYIP settles down and we understand what blockchain startups are actually doing, we realize that nothing radically new has happened. They all work with the same financial instruments: currencies, commodities and securities. It's just an updated version of the global infrastructure.