Before we get into the pitfalls and promises of using Crypto for crowdfunding, we need to understand what the term actually means.
Crowdfunding is a platform to empower businesses and industries or startup ideas by allowing crowds to fund for their favourite ideas. One of the significant needs for raising the crypto crowdfunding concept is because of the increasing instability of the price of various bitcoins and altcoins. This also means that entrepreneurs can no longer rely on the rising assets to fund their projects. For example, the rice of the price of cryptocurrencies like Bitcoin and Litecoin in 2013, allowed the investor in the economic regime that allowed them a new dimension of freedom in the economic sector.
However, the increase in the price also means that new businesses could emerge without the involvement of the outside world.
A decentralized platform provider name MaidSafe witnessed a significant issue faced by the crypto crowdfunding. This platform rose monetary via Cryptocurrency and called their token as the MaidSafeCoin. However, the processes were not as smooth as most of the coins they raised were master coins, which are the altcoins criticized as illiquid. A solution to this problem was Lam’s Vennd project that helped in the automation of the distribution of digital assets that are purchased with cryptocurrencies.
It is just like a project of vending machine where send their cryptocurrencies to a Vennd instance, and the code is decoded to track their inventory. When they run out of the digital assets, the Vennd starts refunding the people who didn’t get a share for the crowdfunding. However, the Swarm is also a competitor platform that provides the investors with voting rights to dispense their Vennd.
As far as we know, Swarm is not the only project that is built to seek a tackle the problem of crypto crowdfunding. Another project by Andreessen Horowitz has invented the idea of developing appoints to fund operational and technical development. These types of coins are pre-allocated for different distributed ventures that would disburse the app coins for fields and contributions like code development. However, this idea has not yet passed the conceptual stage because it follows an ideal hypothesis that is yet to be materialized. However, there is some hope and validity as the name of app coins has been going around in the Silicon Valley market.
Future of Crypto Crowdfunding
Crypto crowdfunding is the future for various investors and other business people who want to keep their identity anonymous. However, the main concern is to access the technology without causing hindrance to the investors. Various projects in the market like the Swarm’s etc. are tackling these issues. Still, it is believed that without proper legal and political guidance and support, these problems cannot be mitigated. AngelList’s Ravikant is reasonably sure that the methods of crypto crowdfunding can divide and succeed in the future with both extensive crowdfunding using Cryptocurrency and the use of ‘dark web’ for funding and proliferating.