Skip to main content
SpringerLink
Log in
Book cover

Blockchain Economics and Financial Market Innovation pp 61–81Cite as

Initial Coin Offerings: Tokens as Innovative Financial Assets

  • Chapter
  • First Online:

Part of the book series: Contributions to Economics ((CE))

Abstract

In this chapter we describe the phenomenon of Initial Coin Offerings (ICOs), i.e. unregulated offerings of digital tokens, built on the innovative blockchain technology, as to provide a means to collect finance for a project on the Internet, disintermediating any external platform, payment agent or professional investor. ICO tokens allow the access to platform services, may serve as cryptocurrencies, or grant profit rights; they are traded on electronic exchanges and represent a new financial asset. We highlight the issues emerged with respect to information asymmetries and moral hazard and we review the nascent empirical literature exploring the ICO token market.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   139.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   179.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   179.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    The data is provided by www.icodata.io

  2. 2.

    https://www.wsj.com/articles/sec-chief-fires-warning-shot-against-coin-offerings-1510247148

  3. 3.

    https://site.warrington.ufl.edu/ritter/ipo-data/

References

  • Adhami, S., Giudici, G., & Martinazzi, S. (2018). Why do businesses go crypto? An empirical analysis of Initial Coin Offerings. Journal of Economics and Business, 100, 64–75.

    Article  Google Scholar 

  • Ahlers, G. K., Cumming, D., Günther, C., & Schweizer, D. (2015). Signaling in equity crowdfunding. Entrepreneurship Theory and Practice, 39(4), 955–980.

    Article  Google Scholar 

  • Akerlof, G. A. (1970). The market for “lemons”: Quality uncertainty and the market mechanism. The Quarterly Journal of Economics, 84(3), 488–500.

    Article  Google Scholar 

  • Amsden, R., & Schweizer, D. (2018). Are blockchain crowdsales the new ‘gold rush’? Success determinants of initial coin offerings (Working Paper).

    Google Scholar 

  • Arslanian, H., Diemers, D., Dobrauz, D., McNamara, G., & Wohlgemuth, L. (2018). Initial coin offerings: A strategic perspective. Pwc.

    Google Scholar 

  • Benedetti, H., & Kostovetsky, L. (2018). Digital tulips? Returns to investors in initial coin offerings. Working paper.

    Google Scholar 

  • Bergh, D. D., Connelly, B. L., Ketchen Jr., D. J., & Shannon, L. M. (2014). Signalling theory and equilibrium in strategic management research: An assessment and a research agenda. Journal of Management Studies, 51(8), 1334–1360.

    Article  Google Scholar 

  • Bertoni, F., & Giudici, G. (2014). The strategic reallocation of IPO shares. Journal of Banking & Finance, 39, 211–222.

    Article  Google Scholar 

  • Block, J. H., De Vries, G., Schumann, J. H., & Sandner, P. (2014). Trademarks and venture capital valuation. Journal of Business Venturing, 29(4), 525–542.

    Article  Google Scholar 

  • Block, J., Hornuf, L., & Moritz, A. (2018). Which updates during an equity crowdfunding campaign increase crowd participation? Small Business Economics, 50(1), 3–27.

    Article  Google Scholar 

  • Catalini, C., & Gans, J. S. (2018). Initial coin offerings and the value of crypto tokens (No. w24418). Cambridge, MA: National Bureau of Economic Research.

    Book  Google Scholar 

  • Chohan, U. (2017). Initial coin offerings (ICOs): Risks, regulation, and accountability (Working Paper).

    Google Scholar 

  • Cong, L. W., Li, Y., & Wang, N. (2018). Tokenomics: Dynamic adoption and valuation (Working Paper).

    Google Scholar 

  • Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R. (2011). Signaling theory: A review and assessment. Journal of Management, 37(1), 39–67.

    Article  Google Scholar 

  • Crosser, N. (2018). Initial coin offerings as investment contracts: Are blockchain utility tokens securities? (Working Paper).

    Google Scholar 

  • Fisch, C. (2019). Initial coin offerings (ICOs) to finance new ventures. Journal of Business Venturing, 34(1), 1–22.

    Article  Google Scholar 

  • Giudici, G. (2015). Equity crowdfunding of an entrepreneurial activity. In D. B. Audretsch, E. E. Lehmann, M. Meoli, & S. Vismara (Eds.), University Evolution, Entrepreneurial Activity and Regional Competitiveness. Berlin, Heidelberg: Springer International Publishing.

    Google Scholar 

  • Giudici, G., & Adhami, S. (2019). The impact of governance signals on ICO fundraising success. Journal of Industrial and Business Economics, 46(2), 283–312.

    Article  Google Scholar 

  • Gompers, P., & Lerner, J. (2000). The venture capital cycle. Cambridge, MA: MIT.

    Google Scholar 

  • Habib, M. A., & Ljungqvist, A. P. (2001). Underpricing and entrepreneurial wealth losses in IPOs: Theory and evidence. The Review of Financial Studies, 14(2), 433–458.

    Article  Google Scholar 

  • Hacker, P., & Thomale, C. (2018). Crypto-securities regulation: ICOs, token sales and cryptocurrencies under EU financial law. European Company and Financial Law Review, 15(4), 645–696.

    Article  Google Scholar 

  • Hornuf, L., & Schmitt, M. (2016). Does a local bias exist in equity crowdfunding? (Working Paper).

    Google Scholar 

  • Howell, S. T., Niessner, M., & Yermack, D. (2018). Initial coin offerings: Financing growth with cryptocurrency token sales (No. w24774). Cambridge, MA: National Bureau of Economic Research.

    Book  Google Scholar 

  • Lee, J., Li, T., & Shin, D. (2018). The wisdom of crowds and information cascades in fintech: Evidence from initial coin offerings (Working Paper).

    Google Scholar 

  • Lipusch, N. (2018). Initial coin offerings: A paradigm shift in funding disruptive innovation (Working Paper).

    Google Scholar 

  • Ljungqvist, A. (2007). IPO underpricing. In Handbook of empirical corporate Finance (pp. 375–422). London: Elsevier.

    Chapter  Google Scholar 

  • Lowry, M., & Schwert, G. W. (2002). IPO market cycles: Bubbles or sequential learning? Journal of Finance, 57(3), 1171–1200.

    Article  Google Scholar 

  • Lukkarinen, A., Teich, J. E., Wallenius, H., & Wallenius, J. (2016). Success drivers of online equity crowdfunding campaigns. Decision Support Systems, 87, 26–38.

    Article  Google Scholar 

  • Masiak, C., Block, J. H., Masiak, T., Neuenkirch, M., & Pielen, K. (2018). The market cycles of ICOs, Bitcoin, and Ether (Working Paper).

    Google Scholar 

  • Momtaz, P. P. (2018). Initial coin offerings (Working Paper).

    Google Scholar 

  • Piva, E., & Rossi-Lamastra, C. (2018). Human capital signals and entrepreneurs’ success in equity crowdfunding. Small Business Economics, 51(3), 667–686.

    Article  Google Scholar 

  • Rasskazova, A., & Koroleva, E. (2018, October). Investment simulation model for estimating the future value of tokens. In 2018 Eleventh International Conference “Management of Large-scale System Development” (MLSD) (pp. 1–5). Prague: IEEE.

    Google Scholar 

  • Ritter, J. R. (1991). The long-run performances of initial public offerings. Journal of Finance, 46, 3–27.

    Article  Google Scholar 

  • Ritter, J. R., & Welch, I. (2002). A review of IPO activity, pricing, and allocations. Journal of Finance, 57(4), 1795–1828.

    Article  Google Scholar 

  • Sehra, A., Smith, P., & Gomes, P. (2017). Economics of initial coin offerings. London: Allen & Overy.

    Google Scholar 

  • Sockin, M., & Xiong, W. (2018). A model of cryptocurrencies (Working Paper).

    Google Scholar 

  • Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355–374.

    Article  Google Scholar 

  • Subrahmanyam, A., & Titman, S. (1999). The going-public decision and the development of financial markets. The Journal of Finance, 54(3), 1045–1082.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Finance, Accounting and Statistics, Vienna Graduate School of Finance, Wien, Austria

    Saman Adhami

  2. School of Management, Politecnico di Milano, Milan, Italy

    Giancarlo Giudici

Authors
  1. Saman Adhami
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Giancarlo Giudici
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Saman Adhami .

Editor information

Editors and Affiliations

  1. School of Business, Ibn Haldun University, Basaksehir, Istanbul, Turkey

    Umit Hacioglu

Rights and permissions

Reprints and permissions

Copyright information

© 2019 Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Adhami, S., Giudici, G. (2019). Initial Coin Offerings: Tokens as Innovative Financial Assets. In: Hacioglu, U. (eds) Blockchain Economics and Financial Market Innovation. Contributions to Economics. Springer, Cham. https://doi.org/10.1007/978-3-030-25275-5_4

Download citation

Publish with us

Policies and ethics

Search

Navigation