Initial Coin Offerings as a new way to raise money? Investigating risks and opportunities from a consumer perspective

Table of Contents

1 Introduction

1.1 ICO as an emerging investment trend?

1.2 How do general investment factors change in the context of ICOs?

1.3 Theoretical approach to develop general investment factors for ICOs

2 Theoretical Foundation

2.1 The phenomenon of ICOs as a new investment form

2.1.1 Blockchain the underlying technology of ICOs

2.1.2 Functioning of cryptocurrency/tokens

2.1.3 Wallet the storage for cryptocurrencies

2.1.4 Whitepaper the company masterplan

2.1.5 Functioning of ICOs in detail

2.1.6 Comparing ICOs to other financing forms: Crowdfunding, VC and IPO

2.1.7 Discussion of the advantages of ICOs

2.1.8 Discussion of the disadvantages of ICOs

2.2 Introducing relevant management theories

2.2.1 How can agency theory help ICO investors?

2.2.2 Why is adverse selection theory relevant for ICOs?

3 Analysing general investment factors in the specific context of ICOs

3.1 What is the role of reputation in context of ICOs?

3.2 Importance of corporate social responsibility for ICOs?

3.3 What is the influence of media coverage on the investment decision?

3.4 How important is risk for an investment in ICOs?

3.5 Other factors that are important for ICO investment

3.5.1 Which impact has past performance for ICOs?

3.5.2 Can the macroeconomic situation influence investments in ICOs?

3.5.3 How does technological uncertainty influence the investment in ICOs?

4 Discussion

4.1 Extending existing investment-decisions literature into the context of ICOs

4.2 Helping managers to align ICOs to the investors’ preferences

4.3 ICO as an emerging field that needs more research

5 Conclusion

Research Objectives and Core Themes

This thesis investigates how general investment factors, such as reputation, corporate social responsibility, and media coverage, shift within the disruptive and volatile environment of Initial Coin Offerings (ICOs), aiming to provide guidance for managers on aligning their offerings with investor preferences.

• Analysis of ICOs as a revolutionary funding mechanism compared to traditional methods like IPOs and VC.
• Application of management theories (Agency Theory, Adverse Selection) to explain information asymmetries in ICO markets.
• Evaluation of qualitative versus quantitative investment factors for ICO participants.
• Investigation of the predominant role of media coverage and reputation in mitigating investor risks.
• Identification of technological uncertainty and security concerns as critical drivers for ICO investment decisions.

Excerpt from the Book

Summary of Chapters

1 Introduction: Introduces the rise of Initial Coin Offerings as a disruptive financial innovation and outlines the research objective regarding investment factors.

2 Theoretical Foundation: Defines key concepts like blockchain and wallets, compares ICOs to traditional financing, and introduces agency and adverse selection theories.

3 Analysing general investment factors in the specific context of ICOs: Examines how factors like reputation, CSR, media coverage, risk, and technological uncertainty influence investor decisions in the ICO market.

4 Discussion: Interprets the findings by highlighting the shifting importance of qualitative indicators and provides practical recommendations for managers.

5 Conclusion: Summarizes the thesis, confirming that qualitative factors hold greater importance for ICOs than quantitative metrics due to information asymmetries.

Keywords

Initial Coin Offering, ICO, Cryptocurrency, Blockchain, Investment Factors, Investor Behaviour, Agency Theory, Adverse Selection, Reputation, Media Coverage, Corporate Social Responsibility, Market Volatility, Information Asymmetry, Cybersecurity, Digital Tokens

Frequently Asked Questions

What is the core subject of this thesis?

The thesis explores Initial Coin Offerings (ICOs) as a modern funding method and investigates how traditional investment factors behave within this unregulated and highly volatile market environment.

What are the primary themes discussed?

The work covers the functioning of ICOs, the application of economic management theories to blockchain-based financing, and the critical analysis of factors that influence investor decision-making, such as reputation and media influence.

What is the main objective of this research?

The aim is to identify how general investment factors, known in conventional financial markets, change or adapt when applied to the disruptive context of ICOs.

Which scientific methods are employed?

The author uses a literature-based theoretical approach, applying well-established management theories like Agency Theory and Adverse Selection Theory to explain the information asymmetries characteristic of the ICO market.

What topics are covered in the main body of the paper?

The main body systematically analyzes investment factors, including reputation, CSR, media coverage, risk, past performance, and technological uncertainty, while comparing ICOs to IPOs, venture capital, and crowdfunding.

How can this work be described using key terms?

The research is best characterized by terms such as Initial Coin Offering, Investor Behaviour, Information Asymmetry, Reputation, and Cybersecurity.

Why is media coverage highlighted as the most important factor for ICOs?

Due to the lack of traditional financial disclosure and regulation, investors rely heavily on media reports to evaluate the legitimacy of an ICO, making media coverage the predominant signal for trust and reliability.

How does this thesis suggest managers should respond to technological uncertainty?

Managers are advised to emphasize high security standards, invest in robust cybersecurity, and provide detailed whitepapers to mitigate investor fears regarding technology-related risks and project maturity.