Initial Coin Offerings: Raising Valueless Capital

Authors: Michael Grote*, Frankfurt School of Finance & Management, Matthew A Zook, University of Kentucky
Topics: Economic Geography, Business Geography
Keywords: Initial coin offerings, venture, blockchain, finance
Session Type: Paper
Day: 4/4/2019
Start / End Time: 1:10 PM / 2:50 PM
Room: Palladian, Omni, West
Presentation File: No File Uploaded

This paper elaborates the circumstances of blockchain-based “initial coin offerings” (ICOs) and their contribution to reshaping existing systems of investment in startups. To date there have been more than 1,100 ICOs in which coins created a private currency of speculative value that provides a funding for entrepreneurs. This latter function often overshadows the reputed business purpose of blockchain making ICOs less a cryptographic technology business solution and more an institutional revolution in start-up financing. Towards this end, this paper focuses on the cryptocurrency practices within startups, particularly as substitutes and/or compliments to existing types of financing. The paper is based on interviews with a variety of blockchain and industry practitioners as well as an in-depth case study of an ICO in early 2018 from which we draw larger implications of how these practices are impacting the spaces of exchange in capitalist economies.

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