Crowdfunding is a concept that has existed for quite some time. While it can be difficult for projects to raise funds, Bitcoin could offer a solution.
Let’s look at the root of the troubles and how crypto could potentially address them.
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The In’s and Outs…
Crowdfunding is a practice where you can donate money – including cryptocurrencies such as Bitcoin, Litecoin, and more cryptocurrencies – to projects, associations or people to develop ideas. This is a powerful way to support social entrepreneurs and innovation through it. Indiegogo and Kickstarter haven’t let up on their brakes. The web 2.0 crowdfunding movement has created several billion-dollar startups and raised millions for thousands of charities.
The potential of crypto crowdfunding is to connect people and ideas. Crowdfunding is severely limited today by legacy finance’s reliance, which prevents most people from having access to it. This is a good idea and it has been successful so far. However, there is a major problem with the dependence on legacy finance, which is both costly and fragmented globally.
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Most crowdfunding platforms only exist in 30 countries. The costs involved in operating this crowdfunding network have been very expensive due to multiple intermediaries. Each successful project attracts a standard 7% fee from a crowdfunding platform. Could crypto’s aggressive transaction fees beat out traditional competitors?
Crowdfunding & Crypto: A Pair Of Aces…
Many platforms have had a hard time with the tight reliance of legacy financial infrastructure; this has made some crowdfunding platforms move over to the “web 3.0” model.
Kickstarter is a great example. It has moved away from Stripe and created its own platform on the other blockchains. This may make sense for equity-based crowdfunding, which can enable the platform and it’s users to invest in new companies and their ideas.
Bitcoin Smiles raised 1.8 BTC last year, which is a prime example of how these two worlds come together. Bitcoin Smiles was an initiative to fundraise and offer free dental care to rural El Salvadorans. Another project that can be used as an example is Kivéclair, a development project that educates people about bitcoin in the Democratic Republic of the Congo.
These are just a few of the early examples of crypto crowdfunding. However, they provide an opportunity for bitcoin to rally with its caring community of bears and bulls.
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