A Crowdfunding platform can easily help budding entrepreneurs fund their dream project. You can easily start a blockchain powered Crowdfunding platform now!
Did you know? Crowdfunding platforms built on a blockchain that has its own cryptocurrency can reduce the heavy transactional fee paid to the third party payment processors every time a transaction is made. This would be a huge win for the people investing in the projects, the people who are collecting funds for their projects and the administrator.
A blockchain powered crowdfunding platform has some of these benefits compared to the traditional venture capital funding:
- A wide spectrum of people would try to invest in a project they believe in, the project already has a user base support.
- The Risk is equally distributed among the crowdfunding investors. If successful, everyone shares the credit and if the project fails, the loss would be negligible to individuals.
- Venture Capitalists are professional and progressively aggressive investors who would want to get involved in the business they are greatly funding. There is every chance that the project owning company or owner losing control over the project. This doesn’t happen in a Crowdfund, where the people investing in the project won’t hold a stake or have shares to control the decisions the founders make.
- In a Venture capital Fund, the requested fund can be delayed or received in milestones, because Venture capitalists can be demanding and would expect a great deal of control within the project they are investing. Crowdfunding has shorter deadlines, and the funds are released as soon as the campaign is complete. There is also the option of the funds being returned to the crowdfund investors if the campaign goal isn’t reached.
- Creators of the project who require funds to be raised, showcase their project/product on the crowdfunding platform, to anyone who might be interested in contributing small funds.
- Project companies can release their digital currencies as rewards or cryptoequity shares to its investors
- Crypto tokens distributed on the blockchain is immutable and impossible to forge. This way investors are indirectly funding on shares that can gain value over time- it is termed as cryptoequity shares
- A company can begin its crowdfunding by first releasing its ICOO (Initial Coin Offering OpenLedger) assets. This can again earn value for the tokens.
- The owner/administrator of the blockchain powered crowdfunding platform receives a small percentage of the overall funded amount from the project creator.
It decentralizes the funding model. It removes the intermediaries which offered charged services (E.g. KickStarter) to new projects, for accumulating and processing funds. These charges summed up-to 10% of the actual funds raised. Blockchain eliminates such middlemen or service providers and hence saving a considerable amount of fund that could be used for the project instead
- Platform’s own Cryptocurrency
Blockchain supports projects which release their own cryptographic tokens to raise funds for their new venture. This attracts the early investors as they will not only enjoy a part of the stake or the profit that the new project makes but also an extra return if the cryptographic tokens offered gains value in the market
- Support for Creative Projects
Blockchain crowdfunding is a solution to those toddler projects which are creative and promising, yet kept off the traditional investment grounds because of its complexity and legalities. Blockchain also welcomes the blockchain technology enthusiasts to begin investing, because the platform helps them to easily connect with projects of their interests
Frequently Asked Questions (FAQs)