Technology and Cryptocurrency Valuation: Evidence from Machine Learning
79 Pages Posted: 11 May 2020 Last revised: 29 Jan 2021
Date Written: January 27, 2021
This paper studies the role of technological sophistication in Initial Coin Offering (ICO) successes and valuations. Using various machine learning methods, we construct technology indexes from ICO whitepapers to capture technological sophistication for all cryptocurrencies. We find that the cryptocurrencies with high technology indexes are more likely to succeed and less likely to be delisted subsequently. Moreover, the technology indexes strongly and positively predict the long-run performances of the ICOs. Overall, the results suggest that technological sophistication is an important determinant of cryptocurrency valuations.
Keywords: Cryptocurrency, Technological Sophistication, Machine Learning, Textual Analysis, FinTech, Blockchain.
JEL Classification: G12, G14, G23
Suggested Citation: Suggested Citation