Research by Statista reveals that Blockchain, a cryptocurrency financial services company will be a game changer for crowdfunding.
According to the research, the global crowdfunding market was valued at $13.64 billion (#5.8 trillion) by 2021. It will double by 2028 at a compound annual growth rate (CAGR) of 11.2%.
Reacting to this, founder and CEO, weTrade, Prashant Kumar said,
“Blockchain carries the potential to ensure crowdfunding, as it can bring transparency and credibility to the entire process. As the benefits of the technology will be available online, the platform will be accessible and anyone would be able to make investments from across the globe”
The usage of the blockchain platform, Ethereum, saw a startup company, Bancor clock the sum of $153 million in three hours. The company also received more than 390,000 Ether.
Also read: CRYPTOCURRENCY IN AFRICA- THE VANTAGE POINT
What is Crowdfunding?
According to Wikipedia, Crowdfunding is the practice of funding a project or venture by raising money from a large number of people, typically via the internet. It is aimed at startups and varies in types e.g., peer-to-peer, rewards, donations, and equity.
Role of Blockchain Technology in Crowdfunding
It is worth noting that the usage and reach of blockchain have globally expanded. With over 30 million Nigerian users out of the 300 million and still counting users in the world, it has faired well.
Fast and Secure
Technology has taken over the world and Blockchain is not left out. Since it is fast, secure, and transparent, it can enhance businesses all over the world.
Both combined (blockchain/technology), helps improve the customer experience from crowdfunding ideas in a tremendous way. It will also change fundraising for so many creators.
This is a very crucial aspect of blockchain technology, as people must trust what they invest in. It is known for being transparent and secure, so there is no room for fraud.
To deal with fraudulent creators, investors are given tokens after funding a startup. This gives them ownership so swindlers won’t get away easily, once it is fraud.
Also Read: BLOCKCHAIN USE-CASE IN AFRICA: PAYMENTS.
Reduced Operational Cost
The use of blockchain technology will help reduce operational costs. It will allow investors to make transactions with zero breakage fees. There are various benefits attached to blockchain-based crowdfunding, such as equity access, flexibility, and a power-to-peer transaction system.
Generation of Income
By advancing applications, businesses will be able to make use of non-fungible tokens (NFTs) to generate income for themselves. It will help them in security, marketing, and keeping a loyal fan base. Investors will also be able to manage their supply chain.
Smart Contracts
They will allow people to identify who is transacting with them (both parties), so no one will be swindled. They are faster since they do not need a middleman to carry out any transactions for them. With smart contacts, there will be transparent communication between investors and startups with crowdfunding projects booming high.
In conclusion, Blockchain technology allows greater opportunities whereby security for intellectual property is provided. Third parties will also not be allowed to get unauthorized information about a project or plans on or before its execution.
Also Read: Financial Technology in Nigeria is Here to Stay
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