Prof. Marten Risius (University of Queensland)

Programm

Datum: 19. Dezember 2019

Zeit: 10.30 - 12.00 Uhr

Ort: Ludwigstraße 28 (VG), 211b

Titel: The Other Side of the Coin - Towards a More Comprehensive Understanding of Initial Coin Offerings

Abstract

With over $22.5bn, entrepreneurs are raising more money through Initial Coin Offerings (ICOs) than through venture capital today. At the same time, however, the first thing that people commonly associate with ICOs are fraudulent blockchain scams (e.g., Bitconnect). Accordingly, lawmakers contrived disparate approaches to regulation ranging from outright bans to no policies at all. We assume that this arbitrary development is fuelled by an insufficient comprehension of what ICOs actually are. The prevailing deficient understanding does not only hinder sophisticated regulation, but also prevents broad scale adoption of fund seekers beyond blockchain entrepreneurs, confines ICOs to certain countries, and only attracts a limited type of investors. Drawing on discussions with a panel of 12 ICO experts and a cluster analysis of information drawn from documents provided by 96 ICOs, we develop a comprehensive transactional model of the ICO process comprising four constituents: project characteristics, investment process, return utilities, and investors. We perform a hierarchical cluster analysis on the operationalizations of the different constituents to further inform the understanding of ICOs. The cluster analysis reveals two types of ICO projects (i.e., applications and infrastructures) and four different coin utilities (i.e., digital cash, computing platform, service protocol, preferred stock). The transactional process model helps us conceptualize the ICO process, disentangle how ICO fundraising is unique to crowdfunding, venture capital, and Initial Public Offerings, as well as demonstrate dark spots of current regulation. We then extend our analysis by theorizing how multi-disciplinary research (e.g., entrepreneurship, policy research, information systems, finance, marketing) can fully appreciate the novelty of ICOs and move beyond the mere prediction of financial performance. Overall, we contribute to a more comprehensive understanding of the other side of the coin that considers ICOs simply as a blockchain scam.