So far, until the end of 2019, over 5,600 ICOs have raised more than USD 27 billion (retrieved from on January 16, 2020). Smart contracts are computer protocols that automatize value-exchange transactions between the entrepreneur and investors, potentially creating perfect disintermediation. Initial Coin Offerings (ICOs) or token sales are smart contracts based on distributed ledger technology (DLT or blockchain) designed to raise external finance by issuing coins or tokens.
Ĭompeting interests: The author has declared that no competing interests exist. The Center for Global Management and the Price Center for Entrepreneurship and Innovation at UCLA did not play any role in the study design, data collection and analysis, decision to publish, or preparation of the manuscript. įunding: I acknowledge financial support for this research project from the Center for Global Management and the Price Center for Entrepreneurship and Innovation at UCLA. Researchers may access their data through their API here. Researchers may access ICObench data using their API. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.ĭata Availability: Section 3 of my updated paper explains in detail how all data can be accessed and how the variables were constructed, providing exact mathematical formulas, where applicable. Received: OctoAccepted: ApPublished: May 21, 2020Ĭopyright: © 2020 Paul P.
National Institute of Public Finance and Policy, INDIA I find that the ICO market is highly susceptible to such environmental shocks, resulting in substantial welfare losses for investors.Ĭitation: Momtaz PP (2020) Initial Coin Offerings. Third, I explore the sensitivity of the ICO market to adverse industry events such as China’s ban of ICOs, the hack of leading ledgers, and the marketing ban on FaceBook. Among the 21% of all tokens that get delisted from a major exchange platform, highly visionary projects are more likely to fail, which investors anticipate. Second, I explore the determinants of market outcomes and find that management quality and the ICO profile are positively correlated with the funding amount and returns, whereas highly visionary projects have a negative effect. However, about 40% of all ICOs destroy investor value on the first day of trading. First, I document that investors earn on average 8.2% on the first day of trading.
The marketability of tokens offers novel insights into entrepreneurial finance, which I explore in this paper. Unlike existing mechanisms for early-stage finance, tokens potentially provide investors with rapid opportunities thanks to liquid trading platforms. ICOs are smart contracts based on blockchain technology that are designed for entrepreneurs to raise external finance by issuing tokens without an intermediary. When visiting external Web sites, users should review those Websites' privacy policies and other terms of use to learn more about what, why, and how they collect and use personally identifiable information.This paper examines the market for initial coin offerings ( ICOs). It is essential for users to take necessary precautions, especially to ensure appropriate safety from viruses, worms, Trojan horses, and other potentially destructive items. does not give any representation regarding the quality, safety, suitability, or reliability of any external Web sites or any of the content or materials contained in them. Links taken to other sites are done at your own risk, and accepts no liability for any linked sites or their content.Īny link from to an external Web site does not imply or mean that endorses or accepts any responsibility for the content or the use of such Web site. When you access an external Web site, keep in mind that has no control over its content. Links to external or third-party Web sites are provided solely for visitors' convenience. Disclaimer for Links to External, Third-Party Web Sites
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