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The practice of funding a project or venture by raising money from people via the Internet is rapidly growing in popularity around the world. Crowdfunding is basically done by raising small amounts of money from a large number of people through an online platform typically from those that are interested in the project and can donate money to fund it. One can simply understand Crowdfunding as raising funds on the Internet.

To fund your project; you pay a fee to the crowdfunding platform for hosting your appeal,or the crowdfunding platform charges some percent fee from the total fund you raise.

Crowdfunding platforms cater to different audiences. Startups seeking funding from investors and other crowdfunding sites that focus on charities and non-profit organizations.

Legally, the issues that could come into play, especially for crowdfunding where company stock is involved, are complex and rapidly changing. The issues get exponentially more complicated with debt crowdfunding because it involves selling securities.

Crowdfunding relies on trust to avoid risk of scammers, lack of accountability and other issues that might arise.

Some websites have rigorous screening processes, a scammer may slip through while others don’t have this process thereby increasing the chances of someone who will either fail to deliver on a project or never intended to do so and this can become a major problem for those who donate in crowdfunding websites.

Some teams ask the question; where did my money go? when they raise funds, start developing their product, and run into some problems, and eventually receive an apologetic letter saying that the product can’t be provided, and there is a less talked about problem as well.

How do we avoid such questions

Boom! Blockchain technology!

The problem with crowdfunding companies is that they are centralized bodies, charging high fees and also influencing the projects. Blockchain-based crowdfunding is set to be a game changer because it decentralizes the funding model from the likes of the companies, thereby storing information in immutable blocks which is so perfect for crowdfunding.

The ledger in a blockchain system grant accurate record keeping of all campaign activities; before the campaign starts, during the donation period, and after funding the campaign. Hence, by having an immutable receipt, you can have proof of your contribution and the reward that is due to you.

With blockchain’s distributed ledger, there is the potential to remove any third party that charges some percent out of the total funds received and the percent going towards payment processing, which will save a considerable amount of the fundraising costs.

Isn’t it interesting that blockchain crowdfunding allows startups to create their own digital currencies and sell them? This allows them to raise funds from early investors, while the investors also have the potential to make money if the value of their cryptographic shares increases.  

In conclusion, blockchain technology opens crowdfunding up to any person with a digital wallet and access to the internet that is, without requiring a credit card or debit card.

Blockcain identity is well-documented and provides a level of security and trust that’s not possible with today’s technology.

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