Initial coin offerings: Linking technology and financialization

Abstract

This paper elaborates on the interactions between digital technologies and financial practices and how they contribute to the ongoing process of financialization. We focus on the circumstances of blockchain-based token offerings and their contribution to reshaping existing systems of investment in startups. We show how future clients become investors via the initial coin offering (ICO) process. The paper is based on interviews with blockchain and industry practitioners during 2018 and 2019 and focuses on an in-depth case study of a specific ICO in early 2018. We suggest a framework consisting of catalysts, cracks and voids to analyze the financialization process and to inform theories of how financialization advances through the new spaces afforded by socially constructed technologies upon which entrepreneurs capitalize. With this framework we provide a better understanding of the mechanics behind financialization, particularly the ways in which business processes, and larger social relations such as the role of investors and clients, are reimagined and reworked.

FinTech, economy and space: Introduction to the special issue

“…This was because of the role of anchor firms in the ecosystem, including financial services incumbents, and the potential domino effect that their relocations could have on FinTech firms. Zook and Grote (2020) demonstrate the significance of financial centres for FinTech in yet another way, by discussing how ICOs shifted from countries like the USA and Switzerland to offshore jurisdictions with the Cayman Islands and the British Virgin Islands in the lead.…”

“…In doing so, the authors show the importance of race to the concept of financial-philanthropy-development complex coined by Gabor and Brooks (2017). Zook and Grote (2020) analyse ICOs as a process of financialisation to be understood through the notions of catalysts, cracks and voids. The cyber-libertarian ideology, blockchain technology and capital availability serve as catalysts used by managers and entrepreneurs to crack open the relationships between clients and services.…”

Financial Geography I: Exploring FinTech – Maps and concepts

“…Nairobi and Johannesburg specialize in payments technology (Findexable, 2019). Zook and Grote (2020) discuss the shift of initial coin offerings for cryptocurrencies from centres in the USA and Switzerland to offshore jurisdictions like the Cayman and British Virgin Islands. Sohns and Wójcik (2020) show the overwhelming concentration of British FinTech in London, and examine the potential impact of Brexit on the sector.…”

Fintech Frontiers in Quantum Computing, Fractals, and Blockchain Distributed Ledger: Paradigm Shifts and Open Innovation

“…Distribution of "tokens" (virtual coins) to donors/lenders in proportion to the amount given, to be used for events or as a medium of exchange with other users: in practice, a more flexible version of the rewards [90]. Use of existing digital currencies such as Bitcoin to obtain the project funded or to obtain a loan, especially if linked to these technologies; the advantage is that donors/lenders are often supporters of cryptocurrencies and automatically become "investors" who want to expand the portfolio hoping that their virtual investments will increase in value [91]. Apps or online services: dedicated App Coin can be created, "coins" (provided to donors/lenders) that can be used by them within the app or an ecosystem of apps and services [92].…”