ABSTRACT
About ten years ago, an innovative financial service form, crowdfunding, swept through the traditional financial system. Since 2013, a new buzzword has become extremely popular in both crowdfunding and crypto areas-the so-called initial coin offering (ICO), or sometimes, ITO (initial token offering), resembling the concept of initial public offering (IPO) (Leach and Melicher, 2012; Abor, 2017; Frederick et al., 2016). The marriage of ICO and crowdfunding represents a new height of disruptive funding method via the issuance of cryptocurrency or token (Zetzsche et al., 2017; Telpner and Ahmadifar, 2017). To date, statistics have shown that the capitalization of the ICO market is in the billions of dollars. In 2017 the ICO exploded with some staggering fundraising results. For example, Tezos coins (persuading ‘a small nation-state’) closed its ICO earlier in July and raised a record $232 m (The Economist, 2017a), while Filecoin raised $257 m (The Economist, 2017b) by September with the benefits of allowing token-holders to purchase and vend digital storage space on each other’s computers. Because ICOs are open to everybody, investors can trade tokens freely after simply signing in and financing an account. Other inherent advantages of ICO also include system decentralization and automation (e.g., via Etherum’s smart contract). This cryptocurrency and crowdfunding blended style of fundraising has rapidly become a new norm for startups and enthusiasts.
