Initial Coin Offerings – A Paradigm Shift in Funding Disruptive Innovation

21 Pages Posted: 24 Mar 2018

See all articles by Nikolaus Lipusch

Nikolaus Lipusch

University of Kassel - Information Systems; University of St. Gallen

Date Written: March 23, 2018


Initial Coin Offerings (ICOs) emerged as a new type of fundraising that is conducted over the web and is mainly used by open-source blockchain-type start-ups to get their business started. While ICOs recently attracted a lot of attention from investors as well as the media, research on this topic is still nascent. The aim of this paper is to collect and analyze currently available information on ICOs in order to provide foundational knowledge on this rather young phenomenon. To derive a first working definition of the concept, we compare ICOs to more established fundraising mechanisms (i.e. Crowdfunding, Venture Capital and Initial Public Offerings) to identify main differences and commonalties. Furthermore, we provide a short overview of how ICOs work as well as the business models that are associated with this type of funding. Finally, we discuss the broader implications of this new type of fundraising. Therefore, the paper discusses two major potentials of ICOs, which lie 1) in the democratization of venture capital as well as 2) in incentivizing the creation of new protocol technologies that form the basis for new innovative business models. Our main contribution lies in providing researchers an overview and a conceptualization of Initial Coin Offerings. In doing so, we hopefully encourage more researchers to pick up this interesting topic and to produce research on their own to further advance the field.

Keywords: Initial Coin Offering, Cryptocurrencies, Innovation, Open Protocol Innovation, Crowd-based Funding

JEL Classification: M13, M15, O32

Suggested Citation

Lipusch, Nikolaus, Initial Coin Offerings – A Paradigm Shift in Funding Disruptive Innovation (March 23, 2018). Available at SSRN: or

Nikolaus Lipusch (Contact Author)

University of Kassel - Information Systems ( email )

Pfannkuchstraße 1
Kassel, 34121

University of St. Gallen ( email )

Langgasse 1
St. Gallen, 9008

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