Crowdfunding and blockchain technology have been making waves in the digital realm and revolutionized the particular fields where they each belong. On the part of crowdfunding, it has somehow created its own brand and marketplace which allow regular and small investors to participate in various types of investment opportunities never before open to them. Blockchain technology, on the other hand, is giving power back to the merchants and customers by allowing the former to take control of its product and the latter to be matched to the product he is searching. The question is, can these two technologies merge at some point in the future?
Crowdfunding is the best funding alternative for companies or entrepreneurs trying to raise funds for their new product or business launch. Its popularity stemmed from the difficulty of small companies or obscure entrepreneurs to secure funding through the traditional investment market. Their only recourse is to seek a venture capitalist or secure debts from financial institutions. The problem with these options is that some venture capitalists, when they see the business or product is really worth it, they can overwhelm these companies or entrepreneurs with investments, effectively diluting the shares, and reducing the owners to minority stockholders. On the part of financial institutions, you need to come up with collateral to secure your debt. These two difficult options is the reason for the stellar rise of crowdfunding in terms of popularity. By allowing small business and entrepreneurs to directly connect with investors to raise funds, they are now able to secure the needed capitalization for their product or business launch.
Blockchain technology, on the other hand, is giving merchants and customers full control over the former’s product and the latter’s decision on whether to go ahead with the purchase or not. More than just giving the power back to these two entities, the technology also features super secure and transparent process where both merchant and customer would feel at ease transacting with each other knowing full well that everything is aboveboard. It also provides online shopping customers an easy way to process their orders, reducing the number of required clicks from an average of 50 to only two or three clicks. This technology has become so popular that even banks and credit card companies are seriously considering integrating it into their own systems.
A Marriage Made In Digital Heaven
Will there ever be a marriage between crowdfunding and blockchain technologies? A blockchain technology-enabled crowdfunding could easily ease out traditional Venture Capital due to the latter’s limited added value for small businesses and entrepreneurs, particularly as regards to the experience, practical support and knowhow. Scaled up crowdfunding platforms can be in a position to offer services like mentoring, project incubations and networking in the house. All of these can be picked up by the company on the market directly. In effect, control will lean toward the small business’ or entrepreneur’s favor.
As what usually happens with new technologies, one innovation drives another type of innovation. As a result, the marriage of blockchain technology and crowdfunding can result in a more efficient allocation of funds as compared to traditional alternative investment methods. The next level could very well be a blockchain crowdfunding platform that will further help bring to fruition those interesting and important projects of startups.