Alla Ivashchenko
State University “Kyiv National Economic University named after Vadim Hetman”, Kyiv, Ukraine
DOI: https://doi.org/10.31410/EMAN.2018.311
2nd International Scientific Conference – EMAN 2018 – Economics and Management: How to Cope With Disrupted Times, Ljubljana – Slovenia, March 22, 2018, CONFERENCE PROCEEDINGS published by: Association of Economists and Managers of the Balkans, Belgrade, Serbia; Faculty of Management Koper, Slovenia; Doba Business School – Maribor, Slovenia; Integrated Business Faculty – Skopje, Macedonia; Faculty of Management – Zajecar, Serbia, ISBN 978-86-80194-11-0
Abstract
The aim of the paper is to identify the main characteristic features of Initial Coin Offering (ICO) as the one of possible ways for company creation. Based on data collected via blockchain it was proved that the commodity-backed blockchain option, namely ZrCoin is transparent, profitable and not susceptible to inflation or typical cryptocurrency volatility type of fund investing, based on real production.
The rate of return on investment (ROI) is expected on the level of up to 100 % which can be considered as the constraint for the crypto crowd investors because of it is too low compared to 300% or 1,000% returns on ICOs. Instead of the mentioned factors, it is a way for applying blockchain technology to raise funds for a real-world manufacturing use case by creating a crypto-only and online-only application.
The author reveals that assessing investment in a crypto ICO exemplified as ZrCoin through risk-return indicators could be reckoned as a fundamental category error because in this case the benefits of blockchain are underestimated. The one of the options of ZrCoin ICO is crowdfunding mechanism usage the main idea of which is to provide a digital blockchain token to every investor. This mentioned electronic asset worth of a kilogram of zirconium dioxide backed by the commodity. More accurately, it is an option that is sold at a discount transforming potential investor to the shareholder of the company. Investors were able to deposit using various currencies, including Bitcoin, Litecoin, Waves and Ethereum.
During conducting research such benefits as safety and transparency of sales, purchases, transactions and income flows for their users were revealed. Meanwhile, the blockchain mechanism allows for real-time monitoring of transactions and project has estimated model of payback on investment. The one of the results of the studied ZrCoin crowdfunded investment campaign is participation of 1,500 investors and collection of 3,5 mln USD that allow to launch the two synthetic zirconium production lines with a total capacity of 800 tons per month. Therefore, it was concluded that the potential of blockchain can be used for creating profitable investment campaign based on commodity-backed blockchain option.
Key words
Blockchain, ICO, token, cryptocurrency, blockchain option, crowdfunding, investment.
References
- Morgan, G., Finney, C. Initial Coin Offerings. Thomson Reuters (Professional) UK Limited, (2018). Available at: https://www.foxwilliams.com/uploadedFiles/FEATURE%20ICO%20with%20copy.pdf
- Initial Coin Offerings: A strategic perspective on ICO. PWC, (2017). Available at: https://www.finance20.ch/wp-content/uploads/2017/09/20170913_Strategic-Implications-of-ICO_PwC-Strategy_DanielDiemers_vF.pdf.
- Dirham, D. Overview of commodity-backed blockchain assets, (2017). Available at: https://www.dinardirham.com/blog/overview-commodity-backed-blockchain-assets/
- Initial Coin Offerings: A strategic perspective Global and Switzerland. PWC, (2017). Available at: https://cryptovalley.swiss/wp-content/uploads/20171221_PwC-S-CVA-ICO-Report_December_final.pdf.
- Becker, Brian G., McAvoy, D. Initial Coin Offerings: A look to 2018. (2017). Available at: https://www.nixonpeabody.com/-/media/Files/Alerts/December-2017/initial-coin-offerings-ICOs.ashx.
- Sehra, A., Smith, P., Gomes, P. Economics of Initial Coin Offerings, (2017). Available at: https://www.allenovery.com/SiteCollectionDocuments/ICO-Article-Nivaura-20170822-0951%20%20-%20Final%20Draft.pdf
- EY research: Initial Coin Offerings (ICOs), (2017). Available at: https://www.ey.com/Publication/vwLUAssets/ey-research-initial-coin-offerings-icos/$File/ey-research-initial-coin-offerings-icos.pdf.
- White paper. ZrCoin. Synergy of Advanced Financial and Industrial Technologies: First Investment Blockchain Option ZrCoin, (2017), Available at: https://zrcoin.io/files/Whitepaper_ENG.pdf.
- ICO watch list. Online platform. Available at: https://icowatchlist.com/ico/zrcoin.
- Cryptocurrency Market Capitalizations. ZrCoin. Online platform. Available at: https://coinmarketcap.com/currencies/zrcoin/#charts.
