Search Results (18)

This paper offers a game-theoretic model of a firm that raises funds for financing an innovative business project and chooses between ICO (initial coin offering) and equity financing. The model is based on information problems associated with both ICO and equity financing well-documented in the literature. Several new features are introduced, for example, information complexity, which is analyzed along with a more traditional imperfect information and an asymmetric information approach. The model provides several implications that have not yet been tested. For example, we find that the message complexity can be beneficial for firms conducting ICOs. Also, high-quality projects can use ICO as a signal of quality. Thirdly, the average size of projects undertaking equity financing is larger than that of firms conducting ICO. Full article

Rice is one of the major food crops across the globe, and its quality and safety highly influence human health. It is the basis of many different products, including rice flour, rice bread, noodles, rice vinegar, and others. Therefore, the rice supply chain has garnered increasing attention due to the high demand for food safety. Furthermore, malpractices in the rice supply chain can impact farmers by generating low revenues despite their great efforts in rice cultivation. In addition, they would cause governments to suffer significant economic losses due to the high cost of importing rice crops from other countries during the off-season. These issues derive from the lack of reliability, trust, transparency, traceability, and security in the rice supply chain. In this research, we propose a secure, trusted, reliable, and transparent framework based on a Blockchain for rice crop supply chain’s traceability from farm to fork. A new crypto token, the Rice Coin (RC), is introduced to keep a record of all transactions between the stakeholders of the rice supply chain. Moreover, the proposed framework includes an economic model and a crypto wallet and introduces an Initial Coin Offering (ICO) for the RC. Based on smart contracts, a transaction processing system was developed for the transparency and traceability of rice crops, including the conversion of the RC to fiat currency. Furthermore, the InterPlanetary File System (IPFS) is proposed in this research to store encrypted data of companies, retailers, and farmers, so to increase data security, transparency, and availability. In the end, the experimental results showed a better performance of the proposed framework compared to already available supply chain solutions in terms of transaction verification time, transaction average gas cost, and new block latency. Full article

The digitalization of the economy provokes the rethinking of manufacturing processes. Despite numerous publications related to Industry 4.0 as a manufacturing approach, the production of fully digital and crypto-asset products was poorly researched. Besides having a supplementary role, crypto-assets may form an entire smart city product. The authors assess the manufacturing of smart city products, fully or partially formed by crypto-assets. The initial issuance of the crypto assets was usually addressed as an Initial Coin Offer, or through the process of increasing the issuer’s capital. The authors assess the Initial Coin Offer, and address it, like manufacturing to produce products for sale. The authors classify all milestones related to the crypto-assets’ issuance, distribution, and revaluation, and assign incomes and expenses to each milestone. Additionally, the ICO-based production costs and revenues were classified according to crypto-asset types, as defined by European Economic Area legislative acts. Full article

Analogous to traditional Initial Public Offerings (IPO), Initial Coin Offerings (ICOs) represent an emerging channel through which firms can access external funding using the new evolving digital financial market for tokens. However, while ICOs represent an alternative funding channel for startups, the ICO market is essentially unregulated, which creates opportunities for fraud such as ‘ICO scams’. This paper addresses the question as to what the expected losses attributable to scams in the market for ICOs are. Using web scrapping techniques, all ICOs launched between August 2014 and December 2019 were first screened for accusations of fraud, before a novel methodological framework was employed to understand the true costs associated with scams. The findings reveal that 56.80% of ICOs were subject to scams, corresponding to 65.80% of the relevant market capitalization, estimated at USD 15.38 billion. Moreover, it is found that the loss distribution due to scam ICOs is governed by a fractal process. Specifically, the power law exponent for the distribution governing losses due to scam ICOs suggests that the second moment is not defined, rendering the sample mean unstable. Taken together, the results in this paper provide evidence that we have not yet seen the largest loss in the market for ICOs and are supportive of an urgent need for ICO market regulations from governments and regulatory agencies. Full article

The landscape of ICOs and its underlying Blockchain technology needs more clarity, given that several overlapping and opposing views exist from governmental institutions, institutional investors, economists, and academia. Those positions stem from confusion, bias, and vested interest. Having consensus from the pioneer entrepreneurs who define Blockchain technology usage, and its marketplace address this need. Furthermore, an agreement on the problems blockchain is solving from the industry perspective would further the understanding of the technology direction and its “raison d’être.” or “reason of existence”. The paper analyzes 4367 businesses that requested funding using ICO whitepapers and raising more than $20 billion US dollars during the most active ICO period. Using Latent Semantic Analyses (LSA), the paper identifies a one-factor solution that explains 98.15% of all ICOs. The paper conducts a second-order analysis that generates an 18-factor solution. Through the empirical analysis, the paper presents its findings as an ICO marketplace stacked layer model. The model is comprised of four layers: (1) Trust; (2) Value exchange; (3) Automation; and (4) Applications to enable value exchange, and an era of new business models. The paper then presents an unbiased, unified entrepreneurial definition of the Blockchain technology usage. Full article

This paper analyzes a financing problem for an innovative firm that is considering launching a web-based platform. The model developed in the paper is the first one that analyzes an entrepreneur’s choice between initial exchange offering (IEO) and initial coin offering (ICO). Compared to ICO, under IEO the firm is subject to screening by an exchange that reduces the risk of investment in tokens; also the firm receives access to a larger set of potential investors; finally tokens become listed on an exchange faster. The paper argues that IEO is a better option for the firm if: (1) the investment size is relatively large; (2) the extent of moral hazard problems faced by the firm is relatively large; (3) the degree of investors’ impatience is relatively small. Furthermore, a non-linear relationship between firm quality and its financing choice is found. Most of these predictions are new and have not been tested so far. Full article

Entrepreneurial, innovative and small- and medium-sized firms experience difficulties with raising funds using traditional debt and equity. Consequently, they are constantly looking for new strategies of financing. The latest inventions are crowdfunding and token issues. In contrast to traditional ways of raising funds these innovations: (1) use modern technology (online transactions, blockchain, etc.) much more actively; (2) are usually quicker in reaching potential investors/funders; (3) use more active network benefits such as, for example, a large number of interactions between investors/funders and between funders and firms. These changes are so significant that some experts list them among the top business inventions of the 21st century. This article provides a review of the growing number of theoretical papers in the areas of crowdfunding and token issues, compares their findings with empirical evidence and discusses directions for future research. The research shows that a large gap exists between the theoretical literature and empirical literature. Full article

This paper introduces a machine learning approach to quantify altruism from the linguistic style of textual documents. We apply our method to a central question in (social) entrepreneurship: How does altruism impact entrepreneurial success? Specifically, we examine the effects of altruism on crowdfunding outcomes in Initial Coin Offerings (ICOs). The main result suggests that altruism and ICO firm valuation are negatively related. We, then, explore several channels to shed some light on whether the negative altruism-valuation relation is causal. Our findings suggest that it is not altruism that causes lower firm valuation; rather, low-quality entrepreneurs select into altruistic projects, while the marginal effect of altruism on high-quality entrepreneurs is actually positive. Altruism increases the funding amount in ICOs in the presence of high-quality projects, low asymmetric information, and strong corporate governance. Full article

The success of Bitcoin has spurred emergence of countless alternative coins with some of them shutting down only few weeks after their inception, thus disappearing with millions of dollars collected from enthusiast investors through initial coin offering (ICO) process. This has led investors from the general population to the institutional ones, to become skeptical in venturing in the cryptocurrency market, adding to its highly volatile characteristic. It is then of vital interest to investigate the life span of available coins and tokens, and to evaluate their level of survivability. This will make investors more knowledgeable and hence build their confidence in hazarding in the cryptocurrency market. Survival analysis approach is well suited to provide the needed information. In this study, we discuss the survival outcomes of coins and tokens from the first release of a cryptocurrency in 2009. Non-parametric methods of time-to-event analysis namely Aalen Additive Hazards Model (AAHM) trough counting and martingale processes, Cox Proportional Hazard Model (CPHM) are based on six covariates of interest. Proportional hazards assumption (PHA) is checked by assessing the Kaplan-Meier estimates of survival functions at the levels of each covariate. The results in different regression models display significant and non-significant covariates, relative risks and standard errors. Among the results, it was found that cryptocurrencies under standalone blockchain were at a relatively higher risk of collapsing. It was also found that the 2013–2017 cryptocurrencies release was at a high risk as compared to 2009–2013 release and that cryptocurrencies for which headquarters are known had the relatively better survival outcomes. This provides clear indicators to watch out for while selecting the coins or tokens in which to invest. Full article

ICOs are very attractive for investors and issuers. ICOs allow funding raising in exchange for cryptographically secure tokens, which are a means of paying for future projects or services. However, there is insignificant regulation of this process all over the world. Some countries have banned crypto assets; others have allowed the free use of tokens but do not give them official status. In this paper, the authors present an overview of the legal regulation of ICOs in different countries, dividing them into three groups: in the first group are the countries with developed legal norms and rules for conducting ICO, they have the subsequent circulation of tokens on their territory; in the second group are the countries that are most friendly to ICOs; the third group of countries has a wait-and-see attitude. The author connect the insufficient law regulation and risks of ICOs in different countries. The types of ICO risks are divided into three main categories: financial, technical, and analytical. The main ways to reduce these risks, depending on their types, are highlighted in this study. They are connected with the improvement of the legal regulation of the publication of a White Paper, the KYC procedure, and the involvement of escrow agents. Full article

We analyze women’s participation and the effects of team gender diversity on initial coin offering (ICO) success measured by the total funding amount raised in the actual ICO and the project’s long-term survival. Using a database featuring 875 initial coin offerings between 2017 and 2019, we find that women are significantly under-represented in ICO projects (on average, only 13% of team members are women). However, for projects that do have participation of women, we find that team gender diversity increases the total funding raised in the ICO. Moreover, when we separate team members into areas of expertise or roles in the project, we find that the presence of women in critical positions, such as being a founder or having financial or legal responsibilities, significantly reduces the likelihood of long-term coin failure. Our results are consistent with the notion that investors perceive women’s participation in leadership positions as a positive signal of desirable organizational practices that will translate into better performance. Our results are also consistent with the idea that having women, who abide by ethical values and are less prone to fraud, reduces the likelihood that informationally opaque ICOs turn out to be scams. Full article

We analyze the effects of attention to global warming on the success of environmental initial coin offerings (ICOs) measured by the total funding amount raised in the actual ICOs and the long-term survival of the projects. Using a database featuring 324 environmental initial coin offerings between 2017 and 2019, we find that attention to global warming increases the total funding raised in an environmental ICO. Moreover, we find that environmental offerings that occur during periods of greater attention to global warming are significantly less likely to fail in the long term. Our results are consistent with the idea that investor attention as a market-discipline mechanism increases the likelihood of survival for environmental ICOs. Full article

There is considerable hype about blockchain in almost every industry, including finance, with significant investments globally. We conduct a systematic review of 851 records and construct a final article sample of 183 for the sample period 2012 to 2020 to identify relevant factors for blockchain adoption in corporate governance. We conduct textual and empirical analysis to develop a decentralized autonomous governance framework and link traditional corporate governance theories to blockchain adoption. Furthermore, we explore present and future use cases and implications of blockchains in corporate governance. Using our systematic review and textual analysis, we further identify gaps and common trends between prior academic and industry literature. Moreover, for our empirical analysis, we compile a unique database of blockchain investments to forecast future investments. In addition, we explore blockchain potential in corporate governance during and post COVID-19. We find prior academic articles to mostly focus on regulation (49 studies) and Initial Coin Offerings (ICOs) (46 studies), while industry articles tend to concentrate on exchanges (10 studies) and cryptocurrencies (9 articles). A significant growth in literature is observed for 2017 and 2018. Finally, we provide behavioural, regulatory, ethical and managerial perspectives of blockchain adoption in corporate governance. Full article

In order to realize the understanding of expected returns after issuance of blockchain new currency initial coin offerings (ICO) and maximize investment returns, in this study, the Semantic Orientation Pointwise Mutual Information (SO-PMI) algorithm is used to create a customer emotional dictionary of blockchain new currency, and collect users’ online comments based on blockchain currency before ICO. The Support Vector Machine (SVM) algorithm is used to construct an evaluation model, analyze and judge users’ comments, make accurate prediction of the expected return of ICO issuing new currency, improve investment operations, and maximize the return of investment. The results show that the combination of the SO-PMI and SVM algorithms can accurately evaluate the price after the issuance of new currency, and then realize the judgment of expected return and obtain the expected return of investment. It can be seen that the combination of algorithms based on data-mining technology is applied to the study of the expected return of new currency issuance in blockchain, which achieves the goal of revenue anticipation and greatly reduces the investment risk of new currency issuance in blockchain. Full article

Distributed ledger technology, also known as the blockchain, is gaining traction globally. Blockchain offers a secure validation mechanism and decentralized mass collaboration. Cryptocurrencies make use of this technology as a new asset class for investors worldwide. Cryptocurrencies are being used by companies to raise capital via initial coin offerings (ICOs). The substantial inflow of unregulated capital into a transactional and transnational industry has aroused interest from not just investors, but also national securities and monetary regulatory agencies. In this paper, we review the Security and Exchange Commission’s initial statements and subsequent pronouncements on ICO’s to illustrate the potential problems with applying an older legal framework to an ever-evolving ecosystem. Recognizing the inability of enforcement within existing regulatory frameworks, we discuss the importance of regulation of the crypto asset class and internal collaboration between government agencies and developers in the establishment of an ecosystem that integrates investor protection and investments. Full article