Are Blockchain Crowdsales the New 'Gold Rush'? Success Determinants of Initial Coin Offerings

66 Pages Posted: 30 Apr 2018 Last revised: 30 Oct 2019

See all articles by Ryan Amsden

Ryan Amsden

McGill University, Desautels Faculty of Management

Denis Schweizer

Concordia University

Multiple version iconThere are 2 versions of this paper

Date Written: April 16, 2018

Abstract

Initial Coin Offerings (ICOs) are a new and unregulated form of crowdfunding that raises funds through a blockchain by selling venture-related tokens or coins in exchange for legal tender or cryptocurrencies. In this paper, we establish token or coin tradability as the primary ICO success measure, and we develop a theoretical framework for how venture uncertainty, venture quality, and investor opportunity set interrelate. We use the largest available dataset to date, consisting of 1,009 ICOs from 2015 to March 2018. Our data highlights that venture uncertainty (not being on Github and Telegram, shorter whitepapers, higher percentage of tokens distributed) is negatively correlated, while higher venture quality (better connected CEOs and larger team size) is positively correlated, with ICO success. Moreover, providing a hard cap in a pre-ICO can help investors measure success in the pre-sale. This is another positive signal of funding success.

Keywords: Coin, Crowdfunding, Crowdsale, Cryptocurrency, Crypto Asset, Blockchain, Distributed Ledger, Equity Financing, Entrepreneurial Finance, Fintech, Initial Coin Offering, Token Offering

JEL Classification: E42, G15, L26

Suggested Citation

Amsden, Ryan and Schweizer, Denis, Are Blockchain Crowdsales the New 'Gold Rush'? Success Determinants of Initial Coin Offerings (April 16, 2018). Available at SSRN: https://ssrn.com/abstract=3163849 or http://dx.doi.org/10.2139/ssrn.3163849

Ryan Amsden

McGill University, Desautels Faculty of Management ( email )

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Denis Schweizer (Contact Author)

Concordia University ( email )

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HOME PAGE: http://www.concordia.ca/jmsb/faculty/denis-schweizer.html

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