The world’s largest crowdfunding websites require registrants to pay after listing and fundraising. Often, crowdfunders must also meet a set of qualifications to launch, such as project type, financial goal and market readiness. Doing so reassures donors and investors of legitimacy and safety. To act as the mediator between crowdfunder and investor, the portal typically takes a cut above 6% plus transaction fees.
In the past, some platforms have experimented with flat rates and no fees. Interestingly, a new trend aims to go further, introducing decentralized crowdfunding. Decentralized crowdfunding builds off bloackchain technology and enables crowdfunders to setup campaigns in environments undictated by strict requirements and ardous registration processess. Moreover, since rooted in bitcoin, the model eliminates the need for moderation and thus vetoes portal fees. So far, this form of crowdfunding suits “micro-projects” best, though it’s quickly gaining traction on the market.
Open-Source Crowdfunding: Lighthouse App
Lighthouse, an open-source desktop app, popularized the decentralized “all-or-nothing” campaign last month. Fairly new to the industry, the platform has contributed an array of interesting ideas. For instance, to avoid bitcoin exchange-rate fluctuations, transactions are deducted from investor wallets only once the creator has gleaned enough support to finish the campaign. This means that donors may retract their funds before the final day. In other words, investments are conditional.
Other likeminded portals currently in beta or in progress include Swarm and Koinify. With that said, there are sundry bitcoin-based platforms, most of which not involved in the decentralized model. Although full of advantages for startups and innovators, decentralized crowdfunding does not come without challenges. A higher demand for tech-savviness, for one, may deter projects from looking into it. As well, a few legal ambiguities currently hold platforms back for equity. Tech Crunch features such benefits and drawbacks in a feature article on Bitcoin 2.0 crowdfunding—it’s an interesting read!
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