To with the development of new technologies,

To embrace most of the features of the alternative funding mechanism in question, Schwienbacher (2010) describes the crowdfunding as “an open call, essentially through the Internet, for the provision of financial resources either in form of donation or in exchange for some form of reward and/or voting rights in order to support initiatives for specific purposes”. A smart contract is a self-executing digital contract enabled by the Ethereum blockchain technology (Davidson, 2016) A distributed ledger is a specific type of database, which is supported by a network of computers (Davidson, 2016) Traditionally, a high-quality trusted ledger is achievable when there is a strong and centralised governmental and institutional frame behind (Davidson, 2016) 1.2 The rise of ICOsAs I introduced in the previous section, the phenomenon of the Initial Coin Offerings has several diverse causes to claim. In particular, up to now, I described the fundraising industry by highlighting the difficulties that start-ups face to raise capital from traditional models. Moreover, the crisis, together with the development of new technologies, has altered the requirements and the needs of entities by imposing some developments on the sector. Indeed, in the last decade, the financial industry has experienced important innovations and revolutions, often radical.

As already presented, the most technological breakthrough is the emergent ICO model which has been enabled by other fundamental novelties: the blockchain technology, that has created new forms of hi-tech start-ups, and the conception of virtual currencies, the so-called cryptocurrencies. In this section, I recall the main features of these complex and constant evolving technologies, and I examine how they permitted the creation of Initial Coin Offerings. Furthermore, it is immediate to realise that all the involving systems are highly interconnected and dependent one another. 1.2.

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1 The Blockchain technology The revolution of the blockchain stands at the core of the Fintech development and it composes the basis on which cryptocurrencies have been and are developed. Principally, Shroff (2018) recalls, as I enlightened in the previous sections, the central reasons that generated this technological change during the financial crisis, since the late 2008, when “manifestations of libertarian distrust in centralized power structures and sovereign regulators” arisen. Indeed, the Blockchain is perceived as the opportunity to entirely transform the traditional financial and banking systems mostly because it entails the disintermediation and decentralisation principles (Boreiko, 2017). Notwithstanding the popularity that this technology is globally gaining in the recent years, it is appropriate to stress that is still new and experimental as there are still improvements to be made and a need of general acceptance.At the beginning, the first version of the blockchain was created and invented in order to solve a precise issue, the double-spending problem in digital money (Davidson, 2016). Indeed, as the author (Davidson, 2016) illustrates, the blockchain has the objective to support, with its specific technology, the cryptocurrencies by exploiting the decentralised database and the proof-of-work consensus mechanism. Indeed, as Pilkington, (2015) points out, blockchain eliminates the double-spending problem the generation of public-key cryptography and with the assignment of private key addresses assigned only to the interested parties.

Despite the transactions are traceable, public keys are not related to a real-world identity, meaning that blockchain technology relies on another fundamental principle, the anonymity (Pilkington, 2015).At this point, it is worth mentioning the pseudonymous Satoshi Nakamoto, the architect(s) of the original disruption of the Bitcoin blockchain, who in 2008 released the whitepaper of the corresponding technology and it became, the following year, the first successful virtual currency. From a technical perspective, the underlying technology brings together mathematical cryptography, open source software, computer networks and incentive mechanisms (Davidson, 2016). Furthermore, it is a type of distributed ledger and more specifically, it is recognised nowadays as a distributed (cryptographically secured) ledger technology (DLT). Normally, as the author (Davidson, 2016) emphasises, a ledger has always been necessary in an economy to obtain the consensus about transactional recording, but what is really changing with blockchain is that it does not require any longer to be centralised and, in turn, trusted. Indeed, the core feature is the fact that blockchain is a “trustless distributed ledger”, since by producing ledgers in a secure and effective way, it is able to create consensus with the absence of any centralised trust coming from institutional and organisational entities (Davidson, 2016).

Technically, blockchains are databases created and stored on the internet, on which no matter what can be encrypted into the relative ledger. Moreover, with the concept of blockchain protocols, the blocks that have been produced generate a consensus and a continuous linked chain of ledgers (Davidson, 2016). Being a decentralised technology, the major consequence and advantage of blockchain is the reduction of the costs. Indeed, without the intervention of institutions and governments that keep track and control these transactions, that in the last decade have been digitised but they were still centralised, a drop in fees is achievable (Davidson, 2016). Thus, instead of having expensive authorities controlling and managing records, there is this open source sofiware that efficiently performs what is needed and creates a peer-to-peer economy (Nakamoto, 2008).

It is favourable then, for several aspects: transparency, cost-efficiency, performance and reliability (Trautman, 2018).As a consequence, new opportunities arisen over the last few years, and blockchain kicked several other technological innovations off. Indeed, as clearly stated by Boreiko (2017), blockchain has the potential to totally disrupt the conventional financial and banking markets quite rapidly.

For instance, as Shroff (2018) indicates, this distributed ledger technology already introduced decentralised autonomous organizations (DAOs), smart contracts and decentralised apps (Dapps). In effect, Collomb (2018), underlines that, thanks to these technological changes, it has been feasible to investigate new methods of raising money with technical characteristics that were once unlikely. Nonetheless, it is a phenomenon that is still suspiciously and apprehensively observed by several national and international regulators due to its underlying principles (Boreiko, 2017).


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