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Role Of Blockchain In Crowdfunding

Crowdfunding is the practice of funding a project or venture by raising small amounts of money from a large number of people, in modern times typically via the Internet. According to experts, there are five key benefits of crowdfunding platforms: efficiency, reach, easier presentation, built-in PR and marketing, and near-immediate validation of concept, which explains why crowdfunding has become an extremely useful alternative to venture capital (VC), and has also allowed non-traditional projects, such as those started by in-need families or hopeful creatives, a new audience to pitch their cause.

The crowdfunding platform in blockchain makes different possibilities for the startups by raising the funds to create their own digital currency and it is a peer-to-peer fundraising model some of the famous crowdfunding cryptocurrencies are coinspace, swarm, judobaby etc. Crowdfunding has offers for creators and other consumers.

How does BlockChain support Crowdfunding?

There are several areas where blockchain supports and improves crowdfunding, crowdfunding platforms powered by blockchain technology removes the need for intermediate third party.

Decentralization: Since blockchain is decentralized it doesn’t rely on any other platforms to create funds. For starters, no longer to be obliged to any rules and any project can get visibility and funded if the investors think to invest, eliminate fees which makes crowdfunding less expensive for the creators.

Access Equity: To provide investors equity or ownership block-chain relies on asset tokenization. For example, a person who plans to create multiple new products with the incoming funds and grant small ownerships stake in the company. This could potentially open whole new world of opportunity.

Universal Opportunity: Any project using a blockchain-based crowdfunding model can get funded. Any person with an internet connection can contribute projects.

Flexible Options: Using blockchain as asset tokenization grants creators and entrepreneurs more liberties. Usually, asset tokens have their own currency to enable organizations to hire professionals and advertisers.

Peer-to-Peer: The cryptocurrencies are exchangeable on a peer to peer network. This usually helps the people for their investment which even generates more interest in the entire process.

Socially Oriented Crowdfunding Platforms (SCPs)

The applications of blockchain technology in crowdfunding promise a possible solution to current obstacles and may facilitate socially oriented crowdfunding platforms (SCPs). Employing a qualitative research approach based on three case studies, this study addresses how blockchain technology can be used to facilitate the social value creation of crowdfunding when adopted as an alternative infrastructure.

Accordingly, this study identifies both the facilitators of the social value creation process through blockchain technology (e.g., reducing operational costs, increasing trust and transparency, and cultivating a broader crowdfunding community) and the barriers of this application in terms of development costs and legal requirements. In addition to answering calls to investigate the role of blockchains in facilitating social activities, this study expands the emerging literature by demonstrating the practical applications of blockchain use in crowdfunding.

Recently, Kickstarter, the crowdfunding platform, has announced that it will live on a public blockchain and will enable anyone, “even Kickstarter competitors,” to build upon or use it. The protocol will be built on Celo, an open-source blockchain that uses the more environmentally friendly proof of stake system. Kickstarter expects to move its site over onto the protocol in 2022.


Blockchain technologies provide an alternative base for crowdfunding platforms.

Crowdfunding allows businesses with really great products and service ideas to raise funds from regular people in small investment amounts. When it works, it can really give your business a big boost. Companies like Kickstarter, Indiegogo, and Crowdfunder were among the earliest to make it popular.

Thus, blockchain makes the funding process safe and offers completely transparent access from anywhere in the world, crowdfunding platforms that use blockchain can help to maximize the success of a project.



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