Technology and Cryptocurrency Valuation: Evidence from Machine Learning

79 Pages Posted: 11 May 2020 Last revised: 29 Jan 2021

See all articles by Yukun Liu

Yukun Liu

University of Rochester - Simon Business School

Jinfei Sheng

University of California, Irvine - Paul Merage School of Business

Wanyi Wang

University of California, Irvine - Paul Merage School of Business

Date Written: January 27, 2021

Abstract

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

Liu, Yukun and Sheng, Jinfei and Wang, Wanyi, Technology and Cryptocurrency Valuation: Evidence from Machine Learning (January 27, 2021). Available at SSRN: https://ssrn.com/abstract=3577208 or http://dx.doi.org/10.2139/ssrn.3577208

Yukun Liu

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

Jinfei Sheng (Contact Author)

University of California, Irvine - Paul Merage School of Business ( email )

4291 Pereira Dr
Irvine, CA 92697
United States

HOME PAGE: http://sites.google.com/site/shengjinfei/

Wanyi Wang

University of California, Irvine - Paul Merage School of Business ( email )

Irvine, CA 92697-3125
United States

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