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John P. Conley
''Blockchain and the Economics of Crypto-tokens and Initial Coin Offerings''
Blockchain startups have embraced initial coin offerings (ICOs) as a vehicle to raise early capital. The crypto-tokens offered in these sales are intended to fill a widely varied set of roles on different platforms. Some tokens are similar to currencies, others are more like securities, and others have properties that are entirely new. Each company's technological vision calls for a token with unique properties and uses. The main point of this paper is that designing a successful token must take into account certain aspects of monetary theory, financial economics, and game theory. Failing to do so can put an otherwise excellent project at risk. We also explore what economics tells us about how to assess the value of tokens offered for sale, how startups should structure their ICOs, and what the implications of assigning various roles to tokens on a platform might be.
Keywords: Blockchain, Crypto-tokens, Cryptocurrency, Initial Coin Offering, Bitcoin, KYC, AML, ICO
JEL: E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
G1 - General Financial Markets: General (includes Measurement and Data)
Manuscript Received : Jun 06 2017 Manuscript Accepted : Jun 06 2017

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