Crowdfunding is not a new concept. It has existed for such a long time that startups and small businesses will raise funds from people to initiate their latest projects or expand their business units with branches. With digitization, crowdfunding events have started happening on digital platforms where the backers can invest their digital currencies.
The online crowdfunding platforms offer services to businesses to conduct their fundraising events. These platforms bridge the gap between the organizations and investors by providing a forum to raise funds.
But over time, we could find many challenges and constraints in using these platforms. To overcome this challenge, you need blockchain support for the seamless storage of data. A blockchain-based crowdfunding platform will do good in this regard.
At Appdupe, we are involved in blockchain app development that is highly secure and anonymous to exchange cryptocurrencies. Let us have a more precise form of discussions on crowdfunding platforms in the following passages.
How does traditional crowdfunding work?
Crowdfunding is nothing but fundraising events conducted by small businesses or startups to raise funds for new projects and new units. It is a way of increasing more investors for the business. The backers or investors will contribute a sum of money to the company to support its idea. The backers will act as the investor and get their profits from the business.
When it comes to crowdfunding, there are three types. They are,
Self-funding is one of the challenging ways of gaining funds where the business leader will raise funds individually.
Funds from banks – Getting funds from banks is accessible, but only if the business is in good financial standing. The bank will consider the revenue and cash flow of the businesses before allocating the funds.
Venture capital – This kind of fundraising is possible only if the business or the product has a mass appeal.
Crowdfunding is entirely different from generating funds where the businesses will advertise their crowdfunding event to the investors and invite them to participate in the event. Social media platforms are a great way to advertise and promote crowdfunding campaigns. Interested investors can approach the official websites of the companies and register themselves for the event.
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Generally, these crowdfunding events happen on traditional platforms, which have many challenges for the businesses to conduct their activity. Some of the limitations of conventional crowdfunding platforms are listed below.
The crowdfunding platforms collect high fees from the businesses to conduct their crowdfunding events. This is a flat fee, whereas it will be acceptable to collect a percentage from crowdfunding.
Many platforms prefer tangible products rather than demand services for crowdfunding. This narrows down the horizon for new products and services.
These platforms fail to advertise the products of Startups which is again a significant constraint for the businesses.
Most of the platforms charge additional fees for marketing and advertising activities that are not affordable for businesses.
Considering fake startups, it is understood that they create a scam and leave their investors empty-handed with no RoI.
The security features of these startups are not up to the level with weak IP. This makes it easy for investors and hackers to hack the data to use for their launch.
How can a blockchain-based crowdfunding platform do good?
Blockchain technology is decentralized and has no server to act as a medium between the users to send or exchange messages or data or money. A blockchain network will share all the data among its peers and store this data chronologically in blocks. So, whenever something happens like data transfer and data exchange, it will be shared with all the network members. The members will have a record of this action on their own devices.
Through a blockchain-based crowdfunding platform, the data will get stored securely, minimizing the risk of hacking or stealing data from the venue. They provide end-to-end transparency, traceability, and efficiency to augment the crowdfunding platform in many ways.
Benefits of blockchain-based crowdfunding platform
Decentralized crowdfunding platforms
Traditional crowdfunding platforms act as an intermediary between the businesses and investors for which take a part of the share from the profits gained through the crowdfunding. But in blockchain-based crowdfunding platforms are entirely decentralized and do not need any third-party involvement. Investors and businesses can communicate directly.
Blockchain-enabled smart contracts will provide excellent accountability for crowdfunding. It is a digital contact that automatically facilitates and verifies the transaction between the parties when they agree to the necessary terms and conditions. Smart contracts allow the parties to communicate with each other directly without intermediaries.
ICO/IEO crowdfunding platforms
This is a popular crowdfunding platform, especially for cryptocurrency-based businesses and startups. The companies will distribute tokens to the investors on the return of investments. ICO and STO are conducted by individuals and companies, whereas IEO involves direct cryptocurrency exchange. Any investor can be a part of this crowdfunding by purchasing a token.
Blockchain-based crowdfunding platforms enable peer-to-peer fundraising. Because of this, the investors will have liquidity towards their portfolios and through this, they can generate more investors’ interests in the project. This will increase the profitability of the crowdfunding business.
Why choose us to develop your blockchain-based crowdfunding platform?
We are a leading app development company specialized in blockchain technology. Appdupe is well known for developing robust blockchain solutions for businesses. Our dedicated team of developers is an expert in blockchain applications. Our prime goal is to assist individuals and companies by making their dreams a reality. We are also involved in providing blockchain solutions to many industries like healthcare, education, and many more.
Our white-label crowdfunding platform script supported by blockchain technology is the best -in class with cutting-edge features. With our crowdfunding platform script, you can rule the internet with a robust platform.
Considering the current scenario, we can understand that blockchain technology is ruling the world through its viable features. At the same time, there is also a strong demand for more crowdfunding platforms from the business community. This will be an ideal time for you to start launching your blockchain-based crowdfunding platform. Contact us right away to discuss further.
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