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Blockchain meets Crowdfunding

Right now, “blockchain” may as well be synonymous with cryptocurrency. In that capacity, blockchain is still a highly effective and arguably revolutionary technology. Yet, the potential applications for blockchain go far beyond Bitcoin and similar forms of money. This may usher in a new era of crowdfunding.

The real power of blockchain is its ability to keep track of exchanges in a way that’s secure, publicly verified, and virtually impossible to use fraudulently. It keeps a record of how ownership changes. This makes it perfect as a platform for creating, distributing, and exchanging currency.

How Blockchain Changes the Crowdfunding Game

So where does blockchain come in? The natural advantages of blockchain technology can support and improve crowdfunding in several distinct areas:

Decentralization

The blockchain is completely decentralized. This means it isn’t going to rely on any platform or combination of platforms to enable creators to raise funds. That’s going to have multiple positive effects for the crowdfunding community. For starters, you’ll no longer be beholden to the rules, regulations, and whims of the most popular crowdfunding platforms on the internet. Literally, any project has a chance of getting visibility and getting funded. It also eliminates the problem of fees. While blockchain upkeep does cost a bit of money, you’ll cut back drastically on transaction fees. This makes crowdfunding less expensive for creators and investors.

Accessible equity (or something similar)

Instead of crowdfunding to enable preorders of upcoming tangible products, blockchain could rely on asset tokenization to provide investors with equity or some similar concept of ownership. For example, an inventor who plans on creating multiple new products with the incoming funds could grant each new investor with a small ownership stake in the company, commensurate with the amount they contribute. That way, investors will see success proportional to the eventual success of the company. This could potentially open whole new worlds of investment opportunity.

Universal availability

Any project using a blockchain-based crowdfunding model can potentially get funded easily, anytime and anywhere in the world. Also, any person with an internet connection can contribute to those projects. There may be some demand for discovery and visibility platforms. But, there isn’t a fundamental limitation the way there is for crowdfunding projects today.

Immediate provision

Blockchain-based crowdfunders wouldn’t have to worry about the “empty promises” that have plagued modern-day crowdfunding projects. Instead of contributing money and waiting weeks or months to receive the promised product, contributors will immediately receive fractional enterprise or product ownership. At Ace Daily Profits, we are able to pay out investors/funders daily and send funds into their cryptocurrency wallets.

Flexible options

Using the blockchain as asset tokenization grants creators and entrepreneurs more liberties. They can raise more funds by issuing more fractional shares in their enterprise and use those funds to expand. Yet, they can also leverage those fractional shares directly. For example, they could save money on hiring employees by compensating them partially in fractional ownership of the business, converting it into an employee-owned enterprise. Asset tokens become their own form of currency in this model, enabling organizations to do more like hire professionals like marketers and advertisers.

Peer to peer exchanges

Just like cryptocurrency today, it’s possible to exchange crowdfunded business or product stakes on a peer-to-peer basis. This provides contributors with more liquidity for their investments. It could serve as a way to generate more interest in the project overall. This change could eventually precipitate the creation of an entirely new type of marketplace.

It’s no secret that crowdfunding has enormous potential. Even in its current, flawed form, funding is helping new entrepreneurs, inventors, and creators improve the world. In the near future when the blockchain serves as the backbone of democratized investor contributions, it’s going to be even more accessible, secure, and flexible for creators and investors. It’s only a matter of time though the exact length of time is hard to estimate. There are still some challenges to overcome and only so much blockchain talent to go around.