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Revisiting Blockchain Token Sales: How Crypto Companies Raise(D) Money

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Blockchains and the Token Economy

Part of the book series: Technology, Work and Globalization ((TWG))

Abstract

Like any start-up, young crypto companies need to raise money. The years 2017 and 2018 saw an abrupt rise in so-called token sales. In a token sale, a start-up issues proprietary blockchain tokens, which can present various rights. Initially, start-ups could employ this funding mechanism relatively free of regulations and without needing an intermediary. In this chapter, we critically reflect on the token sale phenomenon and derive how trust could be established in this setting. Based on extant research and empirical observations, we further trace subsequent developments to delineate technological, organizational, and environmental factors that affected the trajectory of the token sale phenomenon. Finally, we provide insights on the current state of crypto company fundraising. This chapter contributes to research on start-up fundraising and token sales and discusses the opportunities and boundaries of blockchain-enabled decentralization.

Note: earlier versions of this chapter’s contents were published in the journal Business and Information Systems Engineering (BISE) 2019 and in the proceedings of the conference European Conference on Information Systems (ECIS) 2020.

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Author information

Authors and Affiliations

  1. LMU Munich, Munich, Germany

    Esther Nagel & Johann Kranz

Authors
  1. Esther Nagel
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  2. Johann Kranz
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Correspondence to Esther Nagel .

Editor information

Editors and Affiliations

  1. Sam M. Walton College of Business, University of Arkansas, Fayetteville, AR, USA

    Mary C. Lacity

  2. School of International Management, Modul University Vienna, Vienna, Austria

    Horst Treiblmaier

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Nagel, E., Kranz, J. (2022). Revisiting Blockchain Token Sales: How Crypto Companies Raise(D) Money. In: Lacity, M.C., Treiblmaier, H. (eds) Blockchains and the Token Economy. Technology, Work and Globalization. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-95108-5_10

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