How does Blockchain Help in Crowdfunding?

Current Crowdfunding Landscape

  • Increased demand for alternative ways to manage finances due to improved socio-economic status
  • A significant rise in internet and social media users
  • Complexity and hassle to manage finances in the traditional ways
  • Lack of collateral assets to gain credit from traditional financial institutions
  • Increased technological awareness
  • Increased financial awareness

Limitations of Current Crowdfunding Landscape

  • The crowdfunding project might fail to deliver the promised result due to a lack of investments. If failed to collect the required budget, crowdfunding platforms automatically remove the crowdfunding project from its platform.
  • Most people lack basic knowledge regarding the function and dynamics of how crowdfunding works.
  • Fraudsters might set up fake crowdfunding projects to attract funds. There’s currently no framework to track down fraudsters on crowdfunding platforms.
  • Crowdfunding is primarily aimed at unaccredited, nonprofessional investors who may be less qualified to make informed and right decisions regarding any project.
  • People may fail to choose a reliable crowdfunding platform. An unreliable crowdfunding platform possesses the chances of going bankrupt or facing any other legal issues which will harm both the crowdfunding project initiators and the investors.
  • The crowdfunding initiators might fail to set up a realistic budget for the fulfillment of a project as they often ignore additional costs to wrap up a project like production, shipping, taxes, etc.
  • The success of crowdfunding projects relies heavily on technology. Therefore, technical failures may drown even a promising crowdfunding project.

A New Era of Crowdfunding

  • Blockchain technology is decentralized. Therefore, it can maintain a database in a more efficient and low-cost way than centralized technology.
  • The public ledger of blockchain is shared by internet users around the world. It ensures data security, transparency, and integrity. The data on a blockchain cannot be tampered with or forged.
  • As blockchain technology is programmable, it can contribute flexibility and reliability to any project.




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Dr Vin Menon

Dr Vin Menon

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