What is a crowdfunding blockchain platform?
Crowdfunding blockchain platform is the decentralized network for raising funds through asset tokenization. The investors get equity or shares for the startup they invest in. It can be in the form of cryptocurrencies or tokens. The company that raises funding for their project needs to create their own tokens on any preferred blockchain.
When the project hits the road, the early investors will get special perks when using the tokens other than equity shares.
Types of crypto crowdfunding platform
Blockhcain Crowdunding can be possible only by means of cryptocurrencies. There are different types of crypto crowdfunding methods. They are explained as follows.
1. Initial Coin Offering (ICO)
ICO stands for “initial coin offering“. The name suggests that any project or idea that needs fundraising can offer ICO. It can be any service, product, creation of new coin, launch exchange or anything related to cryptocurrency.
The company creates cryptocurrency tokens and releases it on the ICO website for investors to buy. The token offers special benefits to the holders in the form of availing its services or represents some stake in the project.
The roadmap of ICO involves several stages like white paper creation, token creation, pre-ICO marketing, and post ICO marketing that you can find in ICO development.
2. Initial Exchange Offering(IEO)
Initial exchange offering(IEO) comes as the alternative to ICO when the crypto community experiences a major fallback in ICO scam. The IEO rises as transparency and trust becomes the first priority for investors and IEO lets the process go easy.
IEO is the fundraising model that allows the token issuers to list their tokens in the centralized exchanges.
3. Initial DeX Offering(IDO)
IDO stands for “initial dex offering”. This is the most loved fundraising model preferred by entrepreneurs nowadays worldwide. IDO shares the similar concept of IEO and differs in the way of listing mechanism. IDO’s happen in the decentralized exchange(DEX) whereas IEO happens in the Centralized exchange.
IDO eliminates the scam and fraud activities that happened in the early days of ICO. IDO raises capital for the project like a traditional IPO, but it doesn’t give equity to the stakeholders. Instead, it offers company and token holders the freedom to use their tokens in a smart way.
4. Security Token Offering(STO)
Security token offering is the exclusive process of providing business services with automated and legal facilities to raise funds. This surreal process occurs with the assistance of security tokens. They are the worthy blockchain powered crypto-tokens implemented to raise funds from investors across the world.
These tokens benefit the owners with some accessibilities such as profit witnessing, voting rights that provide affirmation for the investors to invest for their business. Certain rules and regulations are incorporated with security tokens that offer more credibility and security to the investors.
Blockchain crowdfunding benefits
Crowdfundfunding when embraced with blockchain solutions, has tons of unseen benefits to offer. They can greatly tackle the problems faced in current crowdfunding platforms. There are three main benefits you can get when using blockchain crowdfunding. They are decentralization, data encryption, Asset tokenization, Smart contracts and Immutability.
Centralized crowdfunding platforms may get commission with project listing fees. The project needs to strictly abide by the rules and regulations to get approval. But here in blockchain, Decentralization eliminates the third party sources in crowdfunding. Because, the intermediate fees are the biggest hurdle for small scale startups who are thriving to get into project development. The distributed ledger technology can record all the transactions in a trust and transparent way that no one can foolproof them.
2. Data encryption
Investors are guaranteed with best data protection policies for their funds through hashing algorithms. No one knows who is investing in the project. Blockchain uses hashing methods to determine the transactions record and it verifies the data in real-time.
3. Asset tokenization
Asset tokenization offers great flexibility to investors. Even small scale investors can get equity in the project they invested in. Fractional ownership is only possible in asset tokenization and blockchain makes it possible through immutable technology.
4. Smart contracts
Smart contracts are a great tool for verifying every transaction in a reliable way. It even allocates the amount of funds to be given for creators in a given time frame. This allows investors to have the confidence that money is spent in a well aligned manner. The smart contract is customizable with business logic and has a set of rules defined.
Blockchain immutability definitely helps crowdfunding platforms to bridge the trust between investors and project initiators. The project records like whitepaper, goals, objectives can be predefined and visible to every investor. The record can’t be altered so that investors can have a clearview about the project commitments.
Must have features in blockchain crowdfunding platform
Hivelance have designed a blockchain crowdfunding platform that’s equipped with user-friendly features and components as follows.
1. Payment gateway
Payment gateway is the integral component in crowdfunding platforms. It should be adopted with multi-currency support to welcome the global audience no matter where they are. Any cryptocurrency should be compatible to invest and withdraw when needed.
2. Admin panel
The admin panel contains consolidated status of campaign report, analytics view on users, user management, project whitelisting, smart contract creation, fund distribution status and data management.
3. Social network sharing
Social media sharing is the key part in making the fundraising project go viral. Platform users can have the option to share the crowdfunding project in social media they are interested in.
4. Intuitive user friendly interface
Investors and startup founders should feel enthusiastic in signing up for the platform, invest them and earn benefits. The platform should be designed with a user -friendly layout and visual guide to explain every functionality.
5. Progress meter
Progress meter is the graphical representation that shows how much needed for the campaign to get completed. It quickly helps project creators to get the status of progress and make them notified regularly.
6. Smart contract
Smart contract plays the crucial role in defining the rules and regulations of the crowdfunding platform. When the users decide to assign a multi-signature contract, then anyone isn't able to withdraw the money until the transaction rule gets executed properly.
Blockchain crowdfunding projects so far
- QuantumRE - QuantumRE is the blockchain powered crowdfunding platform that enables investors to gain equity in properties. The home owners can get the required funding from investors without being levied by heavy interest and charges. The investors can earn the proportional equity and trade the share when the property value increases in future.
- Tecraspace - Tecra Space is a platform for crowdfunding that functions on ideas close to ownership communal funding. The absence of taxes while utilizing cryptocurrency is the platform's main benefit. Additionally, investors can rely on a clear withdrawal process and the ability to keep tabs on the progress of their projects.
- Kickstarter - One of the promising traditional crowdfunding platforms goes with green signal in adapting blockchain technology. The adoption will take blockchain crowdfunding to a new height. In december 2021, they announced plans to make the improvements and make them live in 2022.
- Gitcoin - Gitcoin is the open source crowdfunding platform that gives credits to the creators, developers for developing the web3 ecosystem. The investors can invest in revolutionary web3 projects and become a part of the project.
- Coinstarter - Coinstarter is the exclusive blockchain crowdfunding platform that lets entrepreneurs, creators and startups bring their ideas into reality. Anyone can start a coin based crowdfunding campaign with the help of the coinstarter’s intuitive design and features. The platform even helps you in coin launch, coin distribution, launchpad programs and tokenomics.
Why Hivelance for Blockchain Crowdfunding platform development
Hivelance has been named as one of the reliable blockchain crowdfunding development firms for the last few years. We help companies to launch their blockchain crowdfunding platform in a short time. Starting from project feasibility to platform launch, we delegate a separate resource team for you. Moreover, we can work on blockchain networks like Ethereum, Polygon, Tron, Solana, and Bitcoin to build your crowdfunding platform.