All You Need To Know About Crowdfunding With Blockchain

Republished By Plato

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In the past few years, the crowdfunding business has become one of the major ways of raising money. It typically involves raising money from a large number of people contributing relatively small amounts (who expect a financial or non-financial return) to meet the goal of the project or startup.
Campaigns can be created by companies, charities, and individuals for a specific goal. It has become a popular alternative to venture capital and allows non-traditional projects to pitch their ideas and raise funds for startups.

Another development of recent times is Blockchain technology which has quite a several applications, now including crowdfunding. A Blockchain is a decentralized distributed ledger that makes a record of data in a way that is transparent and difficult to change.
It has the advantage of privacy; the level of security it provides makes it highly resistant to malicious activities.

Benefits Of Blockchain In Crowdfunding

Various crowdfunding platforms exist, and they act as intermediaries between investors and fundraisers. These don’t come without limitations, though. The introduction of Blockchain into crowdfunding helps improve the operations of crowdfunding platforms by providing the following advantages.

Through smart contracts, the costs of operation are reduced, and fundraisers are saved the portion of the money they would have had to pay to the crowdfunding platform from the raised funds.
Blockchain crowdfunding provides a high level of security and prevention of scam projects.
Most crowdfunding platforms focus on fundraising for tangible products, but with Blockchain involvement in crowdfunding, more innovative projects and services can be funded.
Increase in the accessibility of fundraising opportunities in different regions of the world.
They provide instant notification to members on the platform about new startups that can be invested in, so these startups need not pay for marketing and advertising, which would increase costs on limited funds.
Protection of intellectual property, thus reducing the risk of theft of ideas by investors who have the resources.
Faster transactions and cheaper transaction fees.

How Crowdfunding with Blockchain Works

In crowdfunding with Blockchain, the platform acting as an intermediary only provides the technology and name of the local cryptocurrency, which is used as a means of transaction and exchange.
Fundraisers also have to set up their cryptocurrency, and when this is done, everyone on the platform will be notified about the new startup project. Funders can purchase this cryptocurrency to claim their share in the startup and withdraw at any time by selling the currency and losing the share in the project or transferring the same to another project. Blockchain can further improve this modern and innovative way of raising funds by making it more reliable and transparent.

What are Blockchain payment gateways, and how do they fit into this?

Blockchain payment gateways (or cryptocurrency payment gateways) are payment platforms that allow individuals and businesses to receive payments through cryptocurrency transactions from customers in exchange for goods and services.
If a payment is being made for a purchase using a cryptocurrency, for example, Bitcoin, the transaction goes through the cryptocurrency payment gateway, and the Bitcoin is automatically converted to fiat currency (for example, US dollars) at a fixed rate which enables the business owner to avoid the volatility of the cryptocurrency market.
Some gateways do not convert the crypto into fiat currency and allow the business owner to hold the cryptocurrencies for as long as they wish in a crypto wallet provided by the platform.
Blockchain payment gateways are gaining popularity because they charge lower fees than the common credit card payment systems. Here are a few crypto payment gateways.

Coinbase: This is a popular means of Bitcoin transactions and is one of the most used cryptocurrency payment gateways. This Coinbase app for merchants enables instant cryptocurrency payments and swift conversion from cryptocurrencies to fiat currency. The transaction fees start from 0.5% plus a flat rate. It’s compatible with the most popular e-commerce CMS platforms.
Spectrocoin: This is a free crypto wallet and allows instant exchange of funds. One can integrate spectrocoin API on their websites to make transactions in Bitcoin and altcoins. The transaction fee is fixed at 1%, and it provides a Bitcoin debit card. It’s compatible with most e-commerce CMS platforms.
Bitpay: One of the most long-lasting crypto payment gateways globally, it has been around since 2011. Bitpay offers bitpay debit cards which allow for easy crypto to fiat transfers. The fees start from 1%. Among its various features, the Bitpay gateway has eCommerce plugins that are open source. The API-based platform of Bitpay makes it highly interactive to the users. They have a two-factor authentication system that provides extra security. Bitpay has multilingual support features available for more than forty languages. Bitpay is a trusted partner for some of the most reputable businesses in the world like Amazon and MasterCard; Bitpay is widely popular as a crypto payment gateway that led to the usage of cryptocurrencies for transactions, such as the United States, United Kingdom, Canada, and Germany.
Blockonomics: It’s one of the most sophisticated cryptocurrency payment processors. It’s permissionless and does not require a third-party authentication or extra API integration to support transactions. The procedure to make payments is very secure. To pay with cryptocurrency, the user only needs to scan the QR code provided on the webpage of the merchant or from digital wallets. Blockonomics supports a wide range of cryptocurrencies owing to its built-in integration with Shapeshift. The platform charges a 1% fee. Businesses in major economies such as the US, Germany, France, Canada, and the United Kingdom are among the ones that mostly use Blockonomics.

Conclusion

Crowdfunding with cryptocurrency is no longer a new phenomenon. It has gained immense popularity due to the unique benefits that blockchain technology offers in fraud reduction, scalability, and ease of transaction. Through the use of various Blockchain gateways, Funders can easily convert local cryptocurrencies invested in the Blockchain crowdfunding platforms to fiat currencies in the fundraiser’s accounts.