Venture Capital and the Performance of Blockchain Technology-Based Firms: Evidence from Initial Coin Offerings (ICOs)

2019 ◽  
Author(s):  
Christian Fisch ◽  
Paul P. Momtaz
Keyword(s):  
Venture Capital ◽  
Blockchain Technology ◽  
Initial Coin Offerings

scholarly journals Which investors’ characteristics are beneficial for initial coin offerings? Evidence from blockchain technology-based firms

2021 ◽  
Author(s):  
Christian Hackober ◽  
Carolin Bock
Keyword(s):  
Venture Capital ◽  
Positive Influence ◽  
Venture Capitalists ◽  
Resource Based View ◽  
Funding Sources ◽  
Blockchain Technology ◽  
Corporate Venture ◽  
Further Development ◽  
Positive Effect ◽  
Initial Coin Offerings

AbstractInitial coin offerings have recently become one of the most important funding resources for ventures in the blockchain area. However, often ventures do not rely solely on initial coin offerings as funding source but receive also investments from more established investors prior or during their initial coin offering. In particular, blockchain related ventures have drawn the attention of (corporate) venture capitalists but only less is known on the interplay of these different funding sources and their influence on initial coin offerings as well as on ventures’ further development. Based on the signaling theory as well as the resource-based-view our empirical study find that venture capital investors as well as corporate venture capital investors have a significantly positive effect on initial coin offerings. Further, we find that the reputation, the time of treatment as well as the specialization of investors have a positive influence on the initial coin offering. Finally, our results indicate that the positive effect of venture capital investors as well as the specialization of an investor continues to influence blockchain based ventures’ success in the mid-term.

Blockchain will lead next global tech revolution

2016 ◽  
Keyword(s):  
Venture Capital ◽  
Transaction Costs ◽  
Real Life ◽  
Financial Industry ◽  
Content Type ◽  
Blockchain Technology ◽  
Database Technology ◽  
Start Ups

Subject Blockchain technology in finance. Significance Blockchain is a cryptographically enabled database technology that can make many transactions free of counterparty risks and nearly instantaneous, eliminating transaction costs. It was created and tested with bitcoin, a cryptocurrency. The financial industry is interested in it, given its scale and need for reliability and speed. Impacts Blockchain use could expand beyond cryptocurrencies, with the financial industry leading it towards real-life applications. As the blockchain technology could be disruptive, banks are attempting to influence and direct its development early on. Corporate strategists will be the predominant investors in blockchain start-ups rather than traditional venture capital.

Mainstream interest in cryptocurrencies has momentum

2017 ◽  
Keyword(s):  
Venture Capital ◽  
Capital Investment ◽  
Storage Space ◽  
Computing Power ◽  
Content Type ◽  
Venture Capital Investment ◽  
Asset Class ◽  
Market Capitalisation ◽  
Initial Coin Offerings ◽  
Digital Assets

Subject Cryptocurrencies outlook Significance The market capitalisation of cryptocurrencies has increased tenfold from a year ago to more than 120 billion dollars. A bitcoin, at par with an ounce of gold as recently as May, now costs nearly three times as much. This year capital raisings from Initial Coin Offerings have significantly surpassed venture capital investment into blockchain-based technologies. Impacts New cryptocurrencies will be blockchain-based cryptographic tokens that represent digital assets such as storage space or computing power. Cryptocurrencies will become their own asset class as values rise across the board with little correlation to other assets. Bitcoin will continue to undergo the transformation necessary for it to retain its dominance, which is reducing. Cryptocurrencies and Initial Coin Offerings will test the limits of existing laws and regulations.

scholarly journals Know-Your-Customer (KYC) Requirements for Initial Coin Offerings

2020 ◽  
Author(s):  
Nadine Kathrin Ostern ◽  
Johannes Riedel
Keyword(s):  
Conceptual Models ◽  
Design Science ◽  
Cost Effective ◽  
Science Research ◽  
Research Approach ◽  
Legal Certainty ◽  
Compliance Costs ◽  
Blockchain Technology ◽  
Expected Compliance ◽  
Initial Coin Offerings

AbstractBlockchain technology is often proposed as an infrastructure for decentralized Know-Your-Customer (KYC) verification, i.e., a process determining whether a customer is eligible for a given transaction. The benefit of using blockchain technology lies in the expected compliance costs reduction for companies by automatically enforcing KYC-requirements, whose results are accessible by multiple financial institutions. While information systems researchers have proposed conceptual models and prototypes of blockchain-based KYC-systems, they do not yet consider severe penalties that are applicable to companies if KYC-requirements are not met. Hence, if the legal requirements for KYC-processes cannot be met, these systems are not applicable. The paper uses an objective-centered design science research approach to develop a blockchain-based KYC-system for the conduct of ICOs that is compliant-by-design. To this end, the authors first identify existing KYC-requirements and define corresponding system design objectives that are used to develop a KYC-system that automatically enforces KYC-regulations, thereby preventing money laundering and other forms of identity fraud. Second, the authors contribute to the literature by providing a blueprint for compliant-by-design blockchain-based KYC-systems, in the paper, integrated into the investment flow of an ICO. Third, the authors propose a KYC-system that is applicable in the real world, by making – due to legal certainty – KYC-processes cost-effective, i.e., the proposed blockchain-based KYC-system expectably reduces compliance costs for customers and financial organizations.

Blockchain-Based Tokens as Financing Instruments

2021 ◽  
pp. 129-141
Author(s):  
Lennart Ante
Keyword(s):  
Capital Markets ◽  
Corporate Financing ◽  
Technological Basis ◽  
Cost Benefits ◽  
Financial Products ◽  
Blockchain Technology ◽  
Coordinated Regulation ◽  
Initial Coin Offerings ◽  
Sme Financing

Blockchain technology represents a technological basis with which existing corporate financing processes can be supplemented. The issuance of digital tokens offers several potential advantages such as tradability, efficiency, automation, and cost benefits compared to traditional financial products. This transformation of financing processes and capital markets can allow small and medium-sized enterprises (SMEs) to access capital markets and at the same time close existing retail investment gaps. In this chapter, the challenges of SME financing are described and blockchain-based financing (initial coin offerings [ICOs] and security token offerings [STOs]) is introduced. The blockchain-based financing mechanisms are compared with conventional forms of financing and potentials and challenges are discussed. In conclusion, it is stated that potential clearly outweighs risk and that the majority of all existing challenges can be tackled through sensible and coordinated regulation.

Cryptoassets

2019 ◽  
Keyword(s):  
Financial Services ◽  
Record Keeping ◽  
The Public ◽  
High Profile ◽  
Financial Products ◽  
Blockchain Technology ◽  
Disclosure Requirements ◽  
The World ◽  
Considerable Controversy ◽  
Initial Coin Offerings

Cryptoassets represent one of the most high-profile financial products in the world, and fastest growing financial products in history. From Bitcoin, Etherium, and Ripple’s XRP—so-called “utility tokens” used to access financial services—to initial coin offerings that in 2017 rivaled venture capital in money raised for startups, with an estimated $5.6 billion (USD) raised worldwide across 435 Initial Coin Offerings (ICOs). All the while, technologists have hailed the underlying blockchain technology for these assets as potentially game-changing applications for financial payments and record-keeping. At the same time, cryptoassets have produced considerable controversy. Many have turned out to be lackluster investments for investors. Others, especially ICOs, have also attracted noticeable fraud, failing firms, and alarming lapses in information sharing with investors. Consequently, many commentators around the world have pressed that ICO tokens be considered securities, and that concomitant registration and disclosure requirements attach to their sales to the public.

'Crypto' sector could transform international finance

2017 ◽  
Keyword(s):  
International Finance ◽  
Central Banks ◽  
Financial Industry ◽  
Close Attention ◽  
Content Type ◽  
Blockchain Technology ◽  
Special Drawing ◽  
Recent Developments ◽  
Legal Frameworks ◽  
Initial Coin Offerings

Subject Recent developments in the creation and regulation of cryptocurrencies. Significance IMF Managing Director Christine Lagarde warned at the organisation's annual meeting this month that cryptocurrencies are about to create "massive disruption" and that central banks and the financial industry need to pay close attention. She also cited IMF initiatives to explore the use of blockchain technology for the IMF's 'special drawing right' (SDR). China has recently clamped down on cryptocurrencies, curbing trading and banning 'initial coin offerings'. Impacts Governments will try to impose control while also seeking to harness the underlying technology for their own purposes. Some smaller countries will try to establish themselves as friendly 'crypto-jurisdictions', pioneering regulatory and legal frameworks. Underlying blockchain platforms are evolving; bitcoin and ethereum have had mandatory upgrades of their protocol software this year.

scholarly journals Initial coin offerings, information disclosure, and fraud

2021 ◽  
Author(s):  
Lars Hornuf ◽  
Theresa Kück ◽  
Armin Schwienbacher
Keyword(s):  
Venture Capital ◽  
Institutional Investors ◽  
Information Disclosure ◽  
Third Party ◽  
Due Diligence ◽  
Sample Average ◽  
Different Types ◽  
Initial Coin Offerings

AbstractWe study the extent of fraud in initial coin offerings (ICOs), and whether information disclosure prior to the issuance predicts fraud. We document different types of fraud, and that fraudulent ICOs are on average much larger than the sample average. Issuers who disclose their code on GitHub are more likely to be targeted by phishing and hacker activities, which suggests that there are risks related to disclosing the code. Generally, we find it extremely difficult to predict fraud with the information available at the time of issuance. This calls for the need to install a third party that certifies the quality of the issuers, such as specialized platforms, or the engagement of institutional investors and venture capital funds that can perform a due diligence and thus verify the quality of the project.

scholarly journals Policy and Regulatory Challenges of Distributed Ledger Technology and Digital Assets in Asia

Cryptoassets ◽  
2019 ◽  
pp. 263-306
Author(s):  
Douglas Arner ◽  
Ross P. Buckley ◽  
Dirk Zetzsche ◽  
Bo Zhao ◽  
Anton N. Didenko ◽  
...  
Keyword(s):  
Comprehensive Analysis ◽  
Asian Countries ◽  
Speculative Bubbles ◽  
Blockchain Technology ◽  
Distributed Ledger ◽  
Distributed Ledger Technology ◽  
Total Capital ◽  
Key Aspects ◽  
Initial Coin Offerings ◽  
Digital Assets

Since the launch of Bitcoin in 2009, cryptocurrencies and their underlying blockchain technology have risen to global attention. It is now clear Bitcoin and a number of other cryptocurrencies were the focus of one of the largest speculative bubbles in history. This chapter explores blockchain, cryptocurrencies and Initial Coin Offerings (ICOs), as well as policy and regulatory responses in Asia. It demystifies key aspects of blockchain systems, while also disentangling concepts that are often (incorrectly) used interchangeably, such as distributed ledgers and blockchains. The chapter provides data on total capital raised through ICOs and analyzes the distribution of ICOs by country and region. Based on this framework, it conducts a comprehensive analysis of regulatory statements and disparate policy approaches in Asian countries toward digital assets, focusing on cryptocurrencies, blockchain, and ICOs.

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