Skip to main content
SpringerLink
Log in

Blockchain and Alternative Sources of Financing

  • Chapter
  • First Online:
Book cover Cryptofinance and Mechanisms of Exchange

Part of the book series: Contributions to Management Science ((MANAGEMENT SC.))

Abstract

For the past decade, Bitcoin has captured the attention of the world with its extreme price swings and yet constant price rises, outperforming most traditional asset classes. Along with Bitcoin came the phenomenon of the ICOs or Token Offerings, equally captivating, that turned start-ups’ founders into overnight millionaires. For the first time, start-ups with a compelling vision, no longer needed to plead their case, by pitching to multiple stone faced VCs, all so they could raise a few hundred grants. Start-ups could now pitch to the world and raise millions in a matter of minutes. Prompting the CEO of one such start-ups that raised USD25 million and based in Toronto, Canada, to say: “The crypto world is not real, it is a dream”. In this chapter, we will explore the various alternative sources of financing such as ICOs, STOs and IEOs that came along with the Bitcoin, their implications and what we can expect going forward.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 119.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 159.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 159.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    “Ethereum” typically refers to the blockchain platform, that supports the “ether” cryptocurrency. In this chapter, we will often use “Ethereum” and “ether” interchangeably. The trading ticker of “ether” is ETH which will also be often used.

  2. 2.

    Ibid.

  3. 3.

    “Bitcoin” with a capital “B” typically refers to the blockchain technology platform, that supports the “bitcoin” cryptocurrency with lower case “b”. In this chapter we will often use “Bitcoin” and “bitcoin” interchangeably. The trading ticker of “bitcoin” is BTC which will also be often used.

  4. 4.

    Token Fungibility vs. Non-Fungibility: Fungibility is defined by Investopedia as an asset that can be interchanged with other assets or goods of the same type, (Laura Green 2019). For example, money is a fungible asset because it can be divided and subdivided in a any number of parts representing the same asset, (District0x Educational Portal 2019). A real estate property on the other hand is not interchangeable, in its physical form that is, as it is unique and indivisible. On the Ethereum network, ERC20 tokens have a fungible standard while ERC721 tokens follow a non-fungible standard.

  5. 5.

    Ibid.

  6. 6.

    Ibid.

  7. 7.

    Native coins designate cryptocurrencies or tokens that are integral part of a blockchain platform, the protocol layer. Native to the very blockchain upon which dApp and their tokens will be created. Think Ether the native coin, BAT the dApp token build on top of the Ethereum blockchain.

  8. 8.

    A white paper is an authoritative report or guide that informs readers concisely about a complex issue and presents the issuing body’s philosophy on the matter, (Jerry Yu 2018). It is meant to help readers understand an issue, solve a problem, or decide.

  9. 9.

    A yellow paper is a document containing research that has not yet been formally accepted or published in an academic journal.

  10. 10.

    Tokenomics is a set of rules, principles and incentivization mechanism that govern a crypto-currency or a token ecosystem, with the goals of sustaining the vision of a blockchain based platform.

  11. 11.

    KYC or Know your customer, is used to link the movement of funds with its sources, in order to prevent, illegal transactions such as money laundering or other fraudulent activities.

  12. 12.

    Tokenomics is a set of rules, principles and incentivization mechanism that govern a crypto-currency or a token ecosystem, with the goals of sustaining the vision of a blockchain based platform.

  13. 13.

    Ibid.

  14. 14.

    In its published framework on Digital Assets i.e. cryptocurrencies and tokens, the US Securities Exchange Commission (SEC), which regulates securities markets, outlines that all coins (at the exception of Bitcoin and Ethereum) are securities until proven otherwise. Therefore, ICOs should by default fall under the umbrella of securities’ fund raising and must meet the appropriate regulatory guidelines or risk of suffering severe legal consequences. https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets.

  15. 15.

    Accredited investors (can be individual or institution), as per the SEC’s definition, should have a minimum of $200,000 income in the past 2 years and expected in the current year. Alternatively, an accredited investor should own $1 million in net worth excluding the primary home of residence.

  16. 16.

    A sophisticated investor is a high-networth investor who is considered to have a depth of experience and market knowledge in business matters to evaluate the risks and merits of an investment. This makes them eligible for certain benefits and opportunities.

References

Download references

Author information

Authors and Affiliations

  1. InnovFin Consulting Inc., Toronto, ON, Canada

    Othalia Doe-Bruce

Authors
  1. Othalia Doe-Bruce
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Othalia Doe-Bruce .

Editor information

Editors and Affiliations

  1. CEMOTEV, University Paris-Saclay, Versailles, France

    Stéphane Goutte

  2. IPAG Business School, Paris, France

    Khaled Guesmi

  3. Telfer School of Management, University of Ottawa, Ottawa, Ontario, Canada

    Samir Saadi

Rights and permissions

Reprints and permissions

Copyright information

© 2019 Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Doe-Bruce, O. (2019). Blockchain and Alternative Sources of Financing. In: Goutte, S., Guesmi, K., Saadi, S. (eds) Cryptofinance and Mechanisms of Exchange. Contributions to Management Science. Springer, Cham. https://doi.org/10.1007/978-3-030-30738-7_6

Download citation

Publish with us

Policies and ethics

Search

Navigation