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Initial Coin Offerings (ICOs): benefits, risks and success measures

Author

Listed:
  • Alfreda Šapkauskienė

    (Kaunas University of Technology, Lithuania)

  • Alfreda Šapkauskienė

    (Vilnius University, Lithuania)

  • Ingrida Višinskaitė

    (Kaunas University of Technology, Lithuania)

Abstract

The initial coin offering is usually defined as a new, innovative way of raising funds used by organizations, companies, or entrepreneurs, attracting funds through a cryptographic exchange in exchange for the coins that can be sold, used for future products or services purchase or profit. This article provides an overview of the evolving ICO market and indicates the main advantages and risks of the ICO. It is pointed out that ICO offers many advantages, such as high liquidity, return on investment, availability, fast capital raising process, minimization of capital raising costs. Nonetheless, the noticeable benefits of ICOs are often available only when companies or investors agree to take considerable risks, caused by the information asymmetry, lack of investor protection, proper regulation and methodical guidance both for investors and entrepreneurs. Considering the novelty, volatility, emerging risks, growing popularity of the ICO market and the lack of research in the scientific literature, it is important to investigate the factors that influence the success of the ICO, which is usually defined as the amount of funds attracted, listing of the coins, return on investment, market capitalization or the duration of the ICO.

Suggested Citation

  • Alfreda Šapkauskienė & Alfreda Šapkauskienė & Ingrida Višinskaitė, 2020. "Initial Coin Offerings (ICOs): benefits, risks and success measures," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(3), pages 1472-1483, March.
    • Handle: RePEc:ssi:jouesi:v:7:y:2020:i:3:p:1472-1483
    DOI: 10.9770/jesi.2020.7.3(3)
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    Citations

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    Cited by:

    1. Laura Grassi & Nicolas Figini & Lorenzo Fedeli, 2022. "How does a data strategy enable customer value? The case of FinTechs and traditional banks under the open finance framework," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-34, December.
    2. Emilio Boulianne & Mélissa Fortin, 2020. "Risks and Benefits of Initial Coin Offerings: Evidence from impak Finance, a Regulated Initial Coin Offering†," Accounting Perspectives, John Wiley & Sons, vol. 19(4), pages 413-437, December.

    More about this item

    Keywords

    Initial Coin Offering (ICO); token; blockchain; cryptocurrencies; diversification; FinTech; open innovation;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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