Review of Social Media’s Impact on Initial Coin Offerings

Abstract

Initial Coin Offerings (ICOs) have recently gained significant sway as a fundraising method, despite receiving little attention from researchers. Due to the relatively low level of regulation around ICOs, prospective investors and business owners must make decisions in the face of uncertainty. Social considerations may somewhat alleviate this unpredictability. In the context of ICOs, this study examines the impact of social media, notably Twitter and discussion forums, on organizational legitimacy, financing, market success, expert rating, and success rate. Most of the studies employ OLS regression and Sentimental analysis on tweets about ICO investments, Twitter followers, underpricing, and Twitter threads. The findings of this paper imply that high participation on ICO Twitter accounts leads to an increased search volume about ICO, and emotional language used under Twitter accounts. The results are suitable for entrepreneurs and prospective ICO investors. Moreover, participation in discussion forums lends legitimacy to organizations. This paper recommends further investigation into how the ICO phenomenon emerged as a fundamentally IT-based fundraising technique. Further studies can use a large sample size and a variety of methods, including text analysis, cluster analysis, and other machine learning approaches, to examine different social media sites.