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A1749
Title: Investment approach to the blockchain market segments Authors:  Tomasz Slonski - Wroclaw University of Economics (Poland) [presenting]
Aleksander Mercik - Wroclaw University of Economics (Poland)
Abstract: The primary goal is to divide digital token market into different sectors classified according to types of application. The new classification recognizes the underlying value of a token which is based on a function it serves in particular application which create the base for detailed financial analysis of all sectors. Consequently, sectors are put under examination with respect to their size, market trends and unique investment features (volatility and rates of return). The novelty of our research is to propose up-to-date blockchain project classification and perform market segments analysis in its entirety rather than focusing on cryptocurrency leaders. We carefully scrutinize 350 blockchain projects based on Ethereum platform and group them into 21 sectors. The analysis of investment features of each sector designates the most efficient sectors: blockchain infrastructure, media and publishing and ether itself. Additionally, in some sectors series of returns are characterized by autocorrelation which indicates inefficiency and calls for more refined construction of an investment portfolio. We find significant correlation between rates of return of different sectors, which confirms that investors can decompose total risk into markets systematic risk and specific risk of each sector. The overall result suggests that qualified, active investors can find many opportunities on growing blockchain market.