THE CASH GRAB.
For starters, every crowdfunding exchange today is dependent on one of several dedicated crowdfunding platforms. These platforms aren’t providing opportunities for people for free or out of the goodness of their heart. A is taken fee for every project listed. Sometimes, this is a flat fee while others require a percentage of the total proceeds raised by contributors. Companies and organizations can’t be faulted for trying to make money. However, for those whose projects depend upon a critical level of funding, this can be a major problem for them.
MARKETING AND ADVERTISING.
Having a good idea on a crowdfunding platform isn’t a guarantee of success. You need a way to make your crowdfunding page more visible and attract new people to that project. Some crowdfunding platforms have a “featured” section, noting some of the currently most-popular projects. If you never make it to that threshold of popularity, then the benefit if going to be very limited for you. Spending time on branding, pitching, advertising, and strategies like search engine optimization (SEO) is a practical requirement. However, it takes time away from the actual invention or business.
Some creators have seen their entire business model collapse before they even got a chance to start production. When their idea got popular on the crowdfunding circuit, other entrepreneurs got inspired and rushed to beat them to market with a similar product. Even with a copyright in place, you might only be giving more ideas and more inspiration to your top competition.
The blockchain is completely decentralized. This means it isn’t going to rely on any platform or combination of platforms to enable creators to raise funds. That’s going to have multiple positive effects for crowdfunding. For starters, you’ll no longer be beholden to the rules, regulations, and whims of the most popular crowdfunding platforms. Literally, any project has a chance of getting visibility and getting funded. It also eliminates the problem of fees. While blockchain upkeep does cost a bit of money, you’ll cut back drastically on transaction fees. This makes crowdfunding less expensive for creators and investors across the board.
It could be any project using a blockchain-based crowdfunding model can potentially get funded. Also, any person with the internet can contribute to those projects. There may be some demand for discovery and visibility in the platforms, but as of today there isn’t a fundamental limitation, like there is for crowdfunding projects today.
FLEXIBLE AND VARIED OPTIONS.
Using the blockchain as asset tokenization grants creators and entrepreneurs more ways they can reach their goals. They can raise more funds by issuing more fractional shares in their enterprise and use those funds to expand. Yet, they can also leverage those fractional shares directly. As an example, they could save money on hiring employees by compensating them partially in fractional ownership of the business, converting it into an employee-owned enterprise. Asset tokens become their own form of currency in this model, enabling organizations to do more.