Crowdfunding Platform Development Company In Houston, Texas
What crowdfunding used to be like:
Naturally, newer businesses stand little to no chance in such a scenario, regardless of their potential. Only businesses that already offer great services and products can raise funds in this model.
What crowdfunding is like with blockchain:
Using blockchain technology, exchanging value under contracts becomes very easy. Management of both reward-based and equity-based crowdfunding campaigns can be done automatically with the help of smart contracts. The smart contracts can be programmed such that the rewards or the percentage ownership proof of equity are assigned to the contributors as per their contributions to the campaign.
A blockchain-based crowdfunding platform would have no trouble accepting payments in fiat or cryptocurrency. Be it Ethereum, Dogecoin, or the US Dollar; businesses can be funded through anything. Crowdfunding can also be done by creating a cryptocurrency token that contributors can invest in, and these tokens can represent either the reward or equity. – depending on the model of the campaign.
Types of blockchain-based crowdfunding projects:
Here are some of the most commonly used blockchain-based fundraising mechanisms:
Initial Coin Offering: It is a crowdfunding project where the business owners sell some cryptocurrency tokens (called ICO tokens) to investors to fund themselves. This is akin to an IPO (Initial Public Offering) in the stock market. Once the business does well, and the value of the token rises, the investors get a profit.
Initial DEX Offering: It is a fundraising mechanism in which a business lists their token in a decentralized exchange directly, from where the public can purchase or sell them (giving immediate liquidity). With IDOs, fundraising can be done in a very short duration of time.
Security Token Offering: Security tokens are cryptocurrency tokens that certify some ownership rights to the investors, bound by federal regulations. With STOs, investors have assurance about their possessions in the business and hence a greater sense of trust.
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