![]() Some advocates consider this a more pure form of crowdfunding, because it removes any intermediaries standing between the backers and the startup. 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. With blockchain’s distributed ledger, there is the potential to remove this third party, which will save a considerable amount of the fundraising costs.īlockchain crowdfunding works by allowing startups to create their own digital currencies and sell them. Kickstarter provides a service and there are costs to run that service, so it’s hard to blame them for charging 5% of the total funds received, with an additional 3-5% going towards payment processing. Blockchain -based crowdfunding is set to be a game changer because it decentralizes the funding model from the likes of Kickstarter and other companies. The problem with these established crowdfunding companies is that they are centralized bodies, charging high fees and also influencing the projects. If the funding succeeds, customers get whatever was promised to them as part of the campaign. They acted as a trusted third party to keep the money in escrow, helping to protect potential investors from being scammed. Kickstarter, Indiegogo, and others changed that, by allowing startups to connect directly with potential consumers in order to seek funding. ![]() This makes it very difficult for them to get their ideas off the ground. Many small or obscure projects lay outside of the scope of traditional investment. ![]() Blockchain crowdfunding might just be the next step in startup evolution, helping important and interesting projects come to fruition.Ĭrowdfunding provides an excellent way for creative projects to find cash. Ideas that didn’t have mainstream business appeal were not only getting off the ground, but flourishing. In the last few years, sites like Kickstarter and Indiegogo have revolutionized the world for startups. ![]()
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