Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags
Wulf A. Kaal, Marco Dell'Erba · 2017
Initial Coin Offerings (ICOs) are the most efficient means of financing entrepreneurial initiatives in the history of capital formation. ICOs minimize transaction cost and democratize finance while dis-intermediating banks. Yet, ICOs have increasingly involved cases of abuse, lacking quality, and governance concerns, precipitating calls for increased regulation. This article provides an overview of the evolving ICO market as it exists in November 2017 including the ICO process, roadmap, market conditions, crypto economics for ICO startups, core risk factors for investors, and red flags of ICO practices that require industry or regulatory improvements. Key Words: Initial Coin Offerings, Blockchain, Distributed Ledger Technology, Artificial Intelligence, Machine Learning, Data Science, Data Scientists, Innovation, Entrepreneur, Start-up, Big Data, Crytpo Economics, Diversification, Optimization, Efficiency, Governance, Bad Actors, Risk Factors, Regulation JEL Categories: K20, K23, K32, L43, L5, O31, O32 * © 2017 Wulf A. Kaal. Associate Professor, University of Saint Thomas School of Law and Director of the Private Investment Funds Institute, Minneapolis. The author is grateful for outstanding research assistance from librarians Nicole Catlin and Michael Robak. ** Post-Doctoral Fellow, Groningen Center for European Financial Services Law (University of Groningen), Research Associate, LabEx ReFi (ENA, ESCP, Paris I Panthéon-Sorbonne, CNAM). 0 Electronic copy available at: https://ssrn.com/abstract=3067615 Electronic copy available at: https://ssrn.com/abstract=3067615
Cite: Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615. https://doi.org/10.2139/SSRN.3067615
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