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This paper examines whether initial coin offerings (ICOs) are a beneficial form of financing with desirable economic properties. We do so by examining how financing a start-up via an ICO changes the incentives of an entrepreneur to exert effort to reduce cost. An ICO can result in a better or worse alignment of the interests of the entrepreneur and the investors compared with debt and venture capital financing. Notably, an ICO can be the only form of financing that induces optimal effort, and there are projects that should not take place unless they can be financed through an ICO.

Privacy is a feature inherent to the use of cash. With steadily increasing market shares of digital payment platforms, privacy in payments may no longer be attainable in the future. We explore the potential welfare impacts of reductions in privacy in payments. In our framework, firms may use data collected through payments to price discriminate future consumers. A public good aspect arises because individuals do not internalize the full cost of failing to protect their privacy and reduce social welfare by suboptimally choosing not to protect their privacy in payments. We discuss potential remedies, including the issuance of electronic cash.