Blockchain Papers

Manuel Pedro Rodríguez Bolívar, H. Schöll, Roman Pomeshchikov

No abstract is available for this record.

Adrian Hofmann, Julian Kolb, Luc Becker, Axel Winkelmann

As blockchain gained a lot of attention in IS research since its emergence, development into networks and applications have made it extremely relevant for multiple industry branches. Yet observations show, that there remains a lack of in-depth knowledge and standardization, particularly in the field of blockchain applications, DApps. These DApps often consist of multiple smart contracts, used to automate different processes and the technical elements have so far remained unexplored in depth. In this paper we address this problem by creating a data-driven taxonomy of the technical elements of 150 smart contracts within 101 DApps following the approach of Nickerson et al. (2013). We identified 28 dimension and 64 characteristics in our technical and code-based taxonomy.

Seen Meng Chew, Florian Spiegl

In this article, we compare the fundraising processes of initial public offerings (IPOs) and security token offerings (STOs) and explain how the STO process can be operationally more efficient and less costly using distributed ledger technology. We also highlight recent technological advancements surrounding STOs and the world of decentralized finance. We collate information about recent developments in regulation and digital exchanges to support the growth of STOs. We emphasize some important issues to tackle before STOs can be widely accepted as the new way of financing for companies. Finally, we argue that although STOs have the potential to revolutionize the security value chain, they do not have to replace IPOs completely, and the two channels can coexist to provide more opportunities for businesses.

Joel Crank

No abstract is available for this record.

Eva Micheler

Abstract This chapter explores the English law as an example of a particular model for the analysis of intermediated securities. It analyzes the rights of investors through the lens of trust law rather than through bailment and highlights the advantages and disadvantages of the no-look-through model. It also reviews cases where individuals hold a relatively small number of securities through a financial service provider, including the Duomatic principle that gives license to the court to override the formal requirements for shareholder decisions contained in the Companies Act. The chapter demonstrates why the intermediated holding structure that has evolved across the world does not sit comfortably with English law. It cites the recent scoping study conducted by the UK Law Commission combined with the UK Government’s ambition to attract a global pool of investors, which suggests that the UK Government is motivated to address the problem with the English law.

Mieszko Mazur

The risk and return characteristics of NFT-based companies listed on the cryptocurrency market are investigated in this study. The current spike in NFT activity among creators, investors, and traders has prompted our inquiry. The study start by proposing a new classification system for existing NFTs, ranging from NFT blockchains to NFT metaverses to NFT. Next, the study show that NFTs. Earn 130 percent on the first day of trading; Have a long-term investment multiple of 40 (approximately 4,000 percent), which is four times larger than bitcoin; and have positive and strong alpha and above-average beta. The research also show that following the mid-2021 meltdown, the NFT portion of the cryptocurrency market leads market recovery and generates a return of about 350 percent. The paper's conclusion is that integrating NFT infrastructure into current blockchains increases the market value of these networks. Keywords: NFT, Cryptocurrency, Blockchain, Digital Currency, Binance.

De-Rong Kong, Tse‐Chun Lin

No abstract is available for this record.

Wulf A. Kaal

Venture capital (VC) models can be optimized with emerging decentralized technology. There are many disadvantages that come with traditional VC fundraising including illiquidity and ownership struggles, as well as timing. This paper will discuss alternative funding mechanisms that may be available and advantageous to emerging businesses. After discussing the shortcomings of the existing VC market and the rise of alternative early round funding mechanisms, the paper highlights the evolution of VC businesses that are operated by a Decentralized Autonomous Organization (DAO). More specifically, models discussed in this article contribute to the much-needed experimentation with venture capital reputation models.

Katrin Tinn

Among recent FinTech developments, new digital ledger technologies have the potential to facilitate the financing of entrepreneurial projects, as they can enable different and better financing contracts. Costly verification is arguably one of the main reasons why bank financing and debt contracts have been traditionally so prevalent, with investors not being easily assured that entrepreneurs will report accurately future cash flows generated. The adoption of digital ledger technologies can mitigate this friction, by offering a better tool to maintain a shareable history of transactions, which not only reduces verification costs but also further enables “smart contracts” which can benefit from adjusting optimally to incoming data. Such smart contracts (the optimal form of which is found to be a dynamically adjusting profit-sharing rule) dominate less flexible debt and equity contracts that do not give the right incentives for the entrepreneur to continue to try to generate sales, especially when there is learning from data. There remain unresolved issues around digital ledger technology, especially with “proof-of-work” systems, which create limitations for realizing its potential. Permissioned systems may solve some of these problems but remain at an experimental stage. Third-party platforms that collect and share information are another way to reduce the verification costs faced by individual investors, and there seems to be a close link between the evolution toward “smart” contracts and crowdfunding. The appropriate supporting regulation still needs to be established and will have to tackle issues that are quite novel compared to what banking regulations and securities markets regulations have had to address.

Christian Fisch, Michele Meoli, Silvio Vismara

Initial coin offerings (ICOs) are one of the major innovations that characterize the digital revolution of financial markets. Among the expectations created by the digital revolution is the democratization of entrepreneurial finance, defined in terms of the creation of more equality regarding the access to financial resources by categories known to be underrepresented among potential entrepreneurs. Following this line of research, we investigate, through two complementary empirical studies, whether gender, ethnicity, and geography affect the choice of ICOs vs. traditional financing alternatives. Additionally, we assess whether these characteristics increase the amount of money an entrepreneur can raise. In Study I, we compare 390 ICO ventures to a sample of 1,078 VC-backed blockchain ventures, identifying a negative correlation between the choice of an ICO (vs. VC-backing) and a location in an urban area. In Study II, we compare 160 ICO ventures to 163 real estate investment trusts (REITs), reaffirming the results of Study I. The findings show significant participation and likelihood of successful campaigns for ethnical minorities in ICOs, with the latter also being able to collect, ceteris paribus, larger amounts of funding. In contrast, female entrepreneurs do not have higher chances to participate nor raise funds in ICOs.

Célio Gil Gouveia Rodrigues

No abstract is available for this record.

Lennart Ante

Blockchain technology represents a technological basis with which existing corporate financing processes can be supplemented. The issuance of digital tokens offers several potential advantages such as tradability, efficiency, automation, and cost benefits compared to traditional financial products. This transformation of financing processes and capital markets can allow small and medium-sized enterprises (SMEs) to access capital markets and at the same time close existing retail investment gaps. In this chapter, the challenges of SME financing are described and blockchain-based financing (initial coin offerings [ICOs] and security token offerings [STOs]) is introduced. The blockchain-based financing mechanisms are compared with conventional forms of financing and potentials and challenges are discussed. In conclusion, it is stated that potential clearly outweighs risk and that the majority of all existing challenges can be tackled through sensible and coordinated regulation.

Ashish Kumar Saini

The rapid expansion of financial technology (fintech) across international markets has introduced unprecedented innovation in financial services, improving access, efficiency, and user experience. However, this growth also presents significant regulatory challenges for governments and oversight bodies worldwide. Diverse regulatory frameworks, inconsistent cross-border compliance requirements, and evolving fintech business models make it difficult to ensure consumer protection, data security, and financial stability. Emerging issues such as digital currencies, decentralized finance (DeFi), and algorithmic decision-making further complicate the regulatory landscape. This paper explores key regulatory hurdles faced by global fintech ecosystems, including jurisdictional fragmentation, regulatory arbitrage, and the need for agile, technology-aware governance. It also highlights efforts toward international regulatory cooperation and proposes strategies for fostering innovation while ensuring responsible and inclusive financial systems.

Davood Manzoor, Ahmad Norouzi

No abstract is available for this record.

Joseph Stekli, Ümit Cali

This paper explores the potential to reduce the levelized cost of electricity (LCOE) of offshore wind technology through the use of digitalized financial innovations made possible by Distributed Ledger Technology (DLT). Specifically, this paper proposed a novel application of DLT to crowdsource project finance for clean energy projects. An introduction to DLT technology and some of its potential applications is provided first. Next, the potential to move from a more centralized, top-down energy system to a more decentralized, two-way transactive energy system enabled by DLT is discussed. Within this new energy system framework, the idea of crowd-sourced equity funding of the capital cost of renewable energy is introduced. The impact of crowdfunded equity on the LCOE is then explored via the creation of a theoretical offshore wind installation off the coast of New Jersey. An existing offshore wind capital cost model is modified for use in the U.S., and an existing wind annual energy production model is utilized to provide inputs into a LCOE model. Finally, the potential impacts that DLT based crowdfunded equity may have on cost of debt, debt tenor, and debt-to-equity ratio are also input into the LCOE model in order to examine the range of potential impacts it may have on offshore wind LCOE.

Amy Whitaker, Roman Kräussl

A core challenge in studying the real return on artist' work is the extreme difficulty accessing private records from when an artwork was first sold and thus relying on public auction data. In addition, artists do not typically receive proceeds after the initial sale. This paper, for the first time, uses archivally sourced primary market records to model returns on art and introduces a novel fractional equity structure for artists. We first model what would happen if the American artists Jasper Johns and Robert Rauschenberg had retained 10% equity in their work when it was first sold. Second, we model a portfolio return using data from the Betty Parsons Gallery and the Green Gallery. To add a portfolio analysis to the performance of “star” artists, we model the galleries as a fund invested in all of artworks sold, using auction sales as the realization event. We find that the individual Johns and Rauschenberg works would have vastly outperformed equities markets. The gallery portfolio still substantially outperforms the S&P, even including 20% transaction costs. Beyond the art market, our larger conceptual framework for retained fractional equity has broad implications for compensation of early-stage creative work in any field and for potential applications of blockchain technology. This paper was accepted by Karl Diether, finance.

Robyn Owen, Marcus O’Dair

Purpose This paper aims to examine how blockchain technology is disrupting business models for new venture finance. Design/methodology/approach The role of blockchain technology in the evolution of new business models to monetize the creative economy is explored by means of a case study approach. The focus is on the recorded music industry, which is in the vanguard of new forms of intermediation and financialization. There is a particular focus on emerging artists. Findings This paper provides novel case study insights and concludes by considering how further research can contribute to building a theory of technology-driven business models which apply to the development, on the one hand, of new forms of financial intermediaries, more correctly referred to as “infomediaries,” and on the other hand, to new forms of direct monetization by artists. Originality/value This paper provides early insight into the emerging potential applications of blockchain technologies to streamline music industry business service models and improve finance streams for new artists. The findings have far-reaching implications across the creative sector.

Loha Hashimy, Philipp Sandner

There is disagreement in the literature concerning the impact of regulations on firms’ development. While some researchers believe that regulation impedes companies’ development (Poel et al., 2014; Jalilian et al., 2007), others argue that regulations enable companies’ development (Peck et al., 2018; Mayson et al., 2014). This paper aims to contribute to a better understanding of the impact of financial regulations on development of Distributed Ledger Technology (DLT) firms. In-depth semi-structured open-ended interviews have been conducted with 20 Small Medium Enterprise (SME) DLT companies in Europe during April and May 2019. Our results show that the expected impact of financial regulation can be ambiguous as it can both enable and constrain a firm’s development. This is in line with Kitching et al. (2015) theory of regulation as a dynamic force.

Bart Garré, Michael Voisin, Richard Hay, Sophia Le Vesconte

Over recent years, the benefits and use of cases for adopting distributed ledger technology (DLT) in securities markets have been outlined by numerous public and private authorities, including the European Securities and Markets Authority,22 the European Central Bank,3 the Bank for International Settlements,4 the US Federal Reserve5 and the Committee on Payments and Market Infrastructures (CPMI).6 Furthermore, the European Commission has adopted a policy of promoting the uptake of DLT and encouraged exploration of its use across the financial sector, including the securities market.7 Cited benefits include: (i) trust (based on the reduced risk of the data being manipulated); (ii) a single but shared version of the ‘truth’; (iii) a reliable means of sharing control of transactions and data; (iv) automation through smart contracts; and (v) the ability to represent, hold and transfer value without the risk of duplication.8 In the securities market, this could mean, amongst other things: (i) more efficient post-trade processes, reducing the time-to-market; (ii) enhanced reporting and oversight; and (iii) reduced costs, for example.9

Morten Linnemann Bech, Jenny Hancock, Tara Rice, Amber Wadsworth

Innovative technologies, such as distributed ledgers, allow securities to be issued or represented in a new form known as digital tokens. Such "tokenisation" of securities will alter post-trade clearing and settlement, and could improve efficiency in some dimensions. But the fundamental trade-offs involving credit risk and liquidity remain in a tokenised world. To succeed, tokens will need to interoperate with account-based systems, at least in the interim.

Hazik Mohamed

Digital currencies using distributed ledgers can be a digitized version of currency while retaining its four major features: (1) anonymity, (2) peer-to-peer (P2P) exchangeability, (3) universality, and (4) a steady titular value. There is a variety of potential solutions (formats) that can be adopted depending on the attributes and impact of each format on the financial system. This chapter characterizes and examines the benefits, opportunities, costs, and challenges of four key formats, and gives its assessment on the feasibility as well as possibility of practical adoption. Finally, it recommends the adoption of a CBDC (non-universal) for the interbank settlement and wholesale payment systems which has a minimal disruption to the economy, stronger monetary policy transmission and suggests way forward for adoption of an interest-free monetary system.

Teresa Alarcos Tamayo

No abstract is available for this record.

Nipun Agarwal

An early stage funding platform using cryptocurrency smart contracts can potentially provide an equity and debt capital raising platform for new ventures compared to crowdfunding, initial coin offerings (ICOs) and seed funding. The existing capital raising methods are less transparent, have limited depth of funding and less diversification. Utilising a cryptocurrency smart contract-based early stage funding platform will allow new ventures to obtain a staged funding environment, starting from seed funding. Each stage of funding can be represented by a smart contract that is aligned to a formal standardised legally binding contract between the venture and investors through the platform. Competition for funds and a transparent smart contract-based platform should allow free markets to price investments in the new venture in a more efficient fashion. Additionally, such a platform should provide more funding opportunities to new ventures that weren't available prior.

Ashby Monk, Soh Young In

No abstract is available for this record.