Trust is All You Need: An Empirical Exploration of Initial Coin Offerings (ICOs) and ICO Reputation Scores

37 Pages Posted: 29 May 2018

See all articles by Lauren Rhue

Lauren Rhue

Wake Forest University - Schools of Business

Date Written: May 16, 2018


Initial Coin Offerings (ICOs) are increasingly discussed as a viable option for start-up companies to raise capital for new projects. In an ICO, a company issues a virtual coin, similar to bitcoin, to raise money. Investors purchase coins in expectation that these coins and their underlying value will rise in the future. Described as a hybrid of an initial public offering (IPO) and a crowdfunding campaign, an ICO poses unique opportunities and risks for both entrepreneurs and investors. Entrepreneurs can attract millions in public investment without the legal and financial restrictions associated with an IPO, and investors can directly finance start-ups and receive a substantial return on their investment. Given the recent emergence of this technology, there is limited empirical research about the ICO landscape. Using data from multiple platforms, this paper provides an overview of the ICO landscape such as the number of ICOs that are KYC-compliant and that exclude residents of the U.S. and China. In addition, the empirical findings suggest that some variables associated with quality, such as the number of bugs in the smart contract, influence ICO success metrics. Furthermore, this paper analyzes the ICO reputation scores across multiple data sources. There is an inconsistent association of reputation with success metrics and a low correlation of ICO reputation across data sources, highlighting the challenges faced by investors in finding reliable information about ICOs. Given this new landscape, this paper provides a number of potential avenues for research into ICOs. In particular, this research underscores the need for reputation systems to facilitate trust, a bedrock of digital economic transactions.

Keywords: ICO, cryptocurrencies, reputation systems, blockchain, bitcoin, trust, economic, initial coin offerings, e-commerce, entrepreneurship

JEL Classification: L26, L14, E42, G24

Suggested Citation

Rhue, Lauren, Trust is All You Need: An Empirical Exploration of Initial Coin Offerings (ICOs) and ICO Reputation Scores (May 16, 2018). Available at SSRN: or

Lauren Rhue (Contact Author)

Wake Forest University - Schools of Business ( email )

P.O. Box 7659
Winston-Salem, NC 27109-7285
United States

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