Cryptocurrencies in the Global Economic and Financial System. Initial Coin Offerings as an Innovative Tool of Crowdfunding and Promotion

Wawrzyniec Michalczyk

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ISBN/ISSN:

978-83-7695-844-6

DOI:

Wydawnictwo:

Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu

Rok wydania:

2020

Liczba stron:

177

XML:ISBN/ISSN:

ONIX MARC21

Bibliografia:

. Cryptocurrencies in the Global Economic and Financial System. Initial Coin Offerings as an Innovative Tool of Crowdfunding and Promotion. Red. Michalczyk, Wawrzyniec . : Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu, 2020, 177 s. ISBN 978-83-7695-844-6

Bibliografia refWorks:

RT Book, Whole

SR Electronic(1)

A2 Michalczyk, W.

T1 Cryptocurrencies in the Global Economic and Financial System. Initial Coin Offerings as an Innovative Tool of Crowdfunding and Promotion

PB Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu

YR 2020

SN 978-83-7695-844-6

Bibliografia BibTex:

@Book{ 243104, author = "", editor = "Michalczyk, Wawrzyniec", title = "Cryptocurrencies in the Global Economic and Financial System. Initial Coin Offerings as an Innovative Tool of Crowdfunding and Promotion", publisher = "Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu", year = "2020", address = "", isbn = "978-83-7695-844-6" }

Bibliografia endNote:

TY - BOOK

AU -

ED - Michalczyk, Wawrzyniec

TI - Cryptocurrencies in the Global Economic and Financial System. Initial Coin Offerings as an Innovative Tool of Crowdfunding and Promotion

PB - Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu

CY -

PY - 2020

SN - 978-83-7695-844-6

ER -

Netografia (standard APA):

. Red. Michalczyk, Wawrzyniec. Cryptocurrencies in the Global Economic and Financial System. Initial Coin Offerings as an Innovative Tool of Crowdfunding and Promotion [baza danych online] : Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu, 2020 [dostęp: 26 04 2024]. Dostęp w Ibuk Libra: https://libra.ibuk.pl/reader/cryptocurrencies-in-the-global-economic-and-financial-system-initial-wawrzyniec-michalczyk-243104.

crowdfunding, Financial markets, cryptocurrencies, Initial Coin Offerings, payment systems

The monograph’s subject matter centres on cryptocurrencies, an instrument which aspires to be a modern form of money, and on its place in the world economy, payments systems and financial markets. Special attention is paid to the principles ...

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ISBN/ISSN:

978-83-7695-844-6

DOI:

Wydawnictwo:

Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu

Rok wydania:

2020

Liczba stron:

177

XML:ISBN/ISSN:

ONIX MARC21

Foreword8
1. Cryptocurrencies and their economic essence12
1.1. Introduction12
1.2. The genesis of cryptocurrencies in brief13
1.3. Virtual currencies and cryptocurrencies14
1.4. Technological foundations of the bitcoin and other cryptocurrencies16
1.5. Characteristics of the most important cryptocurrencies19
1.6. Cryptocurrencies and the functions of international money22
1.7. The main barriers to the development of cryptocurrencies as a form of money26
1.7.1. The instability of exchange rates26
1.7.2. Regulation underdevelopment33
1.7.3. Security threats37
1.7.4. Low level of dissemination41
1.8. Current trends on the cryptocurrencies’ global market48
1.9. Summary50
References51
2. Cryptocurrencies and the digitalisation of payment systems 56
2.1. Introduction56
2.2. Innovations in cross-border payment services and infrastructure57
2.3. DLT’s potential to enhance cross-border payment services and infrastructure61
2.4. Limitations and feasibility of DLT-based arrangements64
2.5. Regulatory challenges posed by technological developments in payment services67
2.6. The different characteristics of the digital form of central bank money69
2.7. Summary73
References74
3. Cryptocurrencies on the financial markets77
3.1. Introduction77
3.2. Historical outline of the emergence of cryptocurrency exchanges78
3.2.1. Exchanges of traditional financial instruments and cryptocurrency exchanges78
3.2.2. Intensifying the process of creating cryptocurrency exchanges81
3.2.3. Directions and trends of capital flow in the form of cryptocurrencies83
3.3. The most important cryptocurrency exchanges in the world84
3.3.1. The most important cryptocurrency exchanges – factors of capital inflow84
3.3.2. Organization of the stock exchange compared to currency exchanges87
3.3.3. Organization of trading88
3.3.4. Exchange rates design, indices, cryptocurrencies pricing stability89
3.3.5. Factors affecting exchange rates91
3.3.6. Examples of exchanges and their characteristic features92
3.3.7. Crises on currency exchanges and cryptocurrency exchanges94
3.4. Cryptocurrencies as an investment. Investment/hedging strategies in enterprises using cryptocurrencies97
3.5. Current technology trends on stock exchanges, legal regulations for the functioning of cryptocurrency exchanges99
3.6. Summary101
References102
4. The principles of Initial Coin Offerings104
4.1. Introduction104
4.2. Initial Coin Offering – genesis and definitional considerations105
4.3. Initial Coin Offering vs. information asymmetry and signalling theory107
4.4. Characteristics of tokens and blockchain technology112
4.5. Initial Coin Offering as a process and business model116
4.6. Initial Coin Offerings in entrepreneurial finance124
4.7. Regulatory frameworks of Initial Coin Offerings128
4.8. Advantages and disadvantages of Initial Coin Offering131
4.9. Initial Coin Offerings – best practices and recommendations135
4.10. Summary139
References140
5. Initial Coin Offerings in practice147
5.1. Introduction147
5.2. White paper as a primary form of ICO’s promotion148
5.3. Initial Coin Offering listings153
5.4. Funds raised by Initial Coin Offerings (2014–2019)158
5.5. Top Initial Coin Offerings – countries and projects160
5.6. Projects with the biggest return of investment165
5.7. Summary169
References171
Recapitulation173
List of Figures175
List of Tables176

1.Cryptocurrenciesandtheireconomicessence

formofaninnovativecryptographicmechanism(anencryptionalgorithm)andof

theblockchaininsteadofthetrusttotheintermediary(Nakamoto,2008,p.1;Tu&

Meredith,2015,pp.281,282;Xethalisetal.,2016,p.7).

Thefoundationformakingsettlementsincryptocurrencies’systemsisthealgorithm

employedinconfirmingthetransactions(thevalidatingsystem).Atpresenttwo

solutionsdominatehere:proof-of-workandproof-of-stake.Theformerrequires

theinvolvementofsignificantcomputingpowerintheprocessofencryptingand

archivingtransactions,thelatterisbasedonthecollectionofthelargestamountsof

agivencryptocurrencybythenetworkparticipants,whichgivespriorityinapproving

transfersandobtainingremunerationforthis.Proof-of-stakealsoseemstobemore

resistanttomanipulationinthecaseofaccumulatingsufficientlyhighcomputing

power,andalsohaslowerenergyconsumptionandispotentiallyfaster.Thesystems

ofcryptocurrencies,apartfromthisfundamentalfeature,differinencryption

methods(theso-calledhashingalgorithms,e.g.SHA-256,Ethash,Scrypt,Equihash,

Cryptonight,X11)whichhavevarioussecurityparameters,thedifficulty(which

determinesthescaleofsophisticationofhardwarerequiredfor“mining”),andthe

levelofprocessingcosts.Thesupplyofcoinsisalsodiversified-itcanbeboth

fixedandchangeableovertime.Inadditiontoprovidingsettlementpossibilities,

mostofthesystemsalsohaveadditionalfunctions,ofbothinformationtechnology

(applicationdevelopment)andeconomicnature(trade)(ECB,2015,pp.10,11).

Theprocessofcreatingmoreandmorenewcryptocurrenciesisfacilitatedbythe

opensourcecodeofthebitcoin,whichmeansthattheentrybarrierstothemarket

ofdecentralisedpaymentservicesarenegligible,andthemotivationbythevision

ofrepeatingthesuccessoftheprogenitor-veryhigh(Michalczyk,2018c,p.244;

Wiśniewska,2016,pp.4,5).Thereasonsoftheinundationofaltcoinsincludealso

theattemptstoeliminatethebitcoin’sweaknesses(suchashighenergyconsumption

andoccasionalslowdownsinvalidatingtransactionsorincreasesintheircosts)and

thedesiretoissueitssubstitutesfor“mining”andstoringvalue(ECB,2015,p.9).

Theincentiveforseekingsolutionstoeliminatefinancialinstitutionsfromsettlement

systemswasprimarilythereductionofcostsoftransfersandtheintroductionof

acheapmicropaymenttool(Kubasik,2017,p.108;Nakamoto,2008,p.1),but

certainlytherewasalsoacontributionfromthegrowingreluctancetowardsthe

bankingsystemcompromisedbytheglobalfinancialandeconomiccrisis.This

seemstobeconfirmedbythemomentofthecreationandimplementationofthe

bitcoin’sconcept,i.e.theyearsof2008and2009.Oneshouldrememberaswellthe

risingscaleofnetworkinginsocialrelations,economyandtrade(Piotrowska,2014,

p.276),resultinginthedevelopmentofnetworksettlementsystems.Itshouldbe

emphasised,however,thatalthoughcryptocurrencieseliminatetheneedfortrusted

financialinstitutionstoparticipateintransactions,thehighdegreeofcomplexityof

theirmechanismsmeansthattheaverageusersoftheseinnovationsmustatleast

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Cryptocurrencies in the Global Economic and Financial System. Initial Coin Offerings as an Innovative Tool of Crowdfunding and Promotion

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