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Impact of Tokenisation on Economics Demographics and Economics of Selected Crowdfunding Investments

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  • Michael Pirgmann

    (University of Finance and Administration)

Abstract

The text analyzed data from two German crowdfunding investments issued by one initiator in the real estate industry, involving a total of 1,692 investors. One fund has a classical investment structure while the initiator used an innovative approach with a tokenised investment product based on the Ethereum blockchain technology in the second one. This paper tries to find the impact on the demographics of the funds and the profitability for the initiator when making a structural change from a classical investment with a minimum investment size of EUR 1,000 to a tokenised investment structure with a minimum investment of EUR 1. The results show no impact from tokenisation on the structure of the investors´ gender and only minor impact on the age of the investors. But the findings highlight that lowering the minimum investment to EUR 1 via tokenisation to attract more investors, diminishes the profit margin for the initiator substantially. Because every investor comes at an acquisition cost, only a certain number of loss-making small investments in relation to profitable high investments can be compensated. Since it is not possible to precisely determine the density distribution of investment sizes in advance to placing a new investment, it is recommended to give up the minimum investment size of EUR 1 to avoid the risk of attracting too many investors at a deficit, hence diminishing the profit margin of the funds.

Suggested Citation

  • Michael Pirgmann, 2023. "Impact of Tokenisation on Economics Demographics and Economics of Selected Crowdfunding Investments," ACTA VSFS, University of Finance and Administration, vol. 17(1), pages 7-22.
    • Handle: RePEc:prf:journl:v:17:y:2023:i:1:p:7-22
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    File URL: https://acta.vsfs.eu/pdf/acta-2023-1-01.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Tokenisation; Crowdfunding; Real Estate Crowdfunding; Asset Tokenisation;
    All these keywords.

    JEL classification:

    • F6 - International Economics - - Economic Impacts of Globalization
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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