How Bitcoin and Blockchain Have Already Changed Crowdfunding

What is a blockchain?

Crowdfunding

  • These platforms take a fee for every listed project.
  • Not all of these platforms accept services as a possible project.
  • Startups are required to pay for marketing and advertising, which comes as yet another strain on the already limited funds available.
  • In several cases, startups turn up as scams. Investors are left with no way to re-gain their lost money as these fraud startups either run away with the money or perform poorly.
  • A startup might have no protection of its Intellectual Property and leaves itself exposed to experienced investors who may steal the idea and market it later to their advantage.

How does blockchain support crowdfunding?

  1. Decentralization: Blockchains act independently and don’t rely on or entrust responsibility to an intermediary/central authority to create funds. The absence of obligations attracts investors. This eliminates fees and makes crowdfunding cheaper for creators. The investors can directly seek to invest in the blockchain projects they consider profitable or investment-worthy.
  2. Access Equity: Blockchain uses asset tokenization to provide investors equity or ownership. Investors can simply buy these tokens, representing a share in the project, and invest in it.
  3. Universal Opportunity: Projects which use a blockchain-based crowdfunding model can be funded. People with an internet connection can contribute to projects.
  4. Flexible options: Creators and entrepreneurs are granted more liberty when using blockchain and asset tokenization. VC funds and other sources of capital are often pegged with intrusion and dilution of the control, which may result in biased decisions. On the other hand, Blockchain crowdfunding results in community ownership and governance.
  5. Peer-to-peer: Cryptocurrencies can be exchanged on a peer-to-peer network, making the entire fundraising process transparent and the investments more liquid.
  6. Smart Contracts: Blockchain-enabled smart contracts can provide greater accountability in crowdfunding. These contracts provide built-in milestones that prevent funds from being released without provenance for a campaign’s legitimacy. This also prevents large amounts from being misused by ill-intended or are not qualified to run a crowdfunding campaign.

Bitcoin Crowdfunding

Defi Crowdfunding

Crowdfunding via ICOs and IEOs

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A blockchain enthusiast and entrepreneur’s musings on the next big revolution since the Internet.

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Dr Vin Menon

A blockchain enthusiast and entrepreneur’s musings on the next big revolution since the Internet.