Crowdfunding is a powerful mechanism for innovation and support for social projects. Platforms like Kickstarter and Indiegogo have spearheaded the Web 2.0 crowdfunding movement, spawning multi-billion dollar tech startups like Oculus and raising thousands of dollars.
Through these platforms, the online community has been able to join forces and mobilize resources at unimaginable speeds and scales, but up to a point. Crowdfunding today is shrinking significantly due to its reliance on legacy funding, which limits the access of the majority of the world to crowdfunding.
The crowdfunding revolution started by the internet could be taken to the next level with Bitcoin. This could dramatically increase the size of the crowdfunding pie and have an unimaginable impact on lives around the world. As you can see in this article, some trials look promising.
The main problem with crowdfunding is not only that it is expensive, but also that it depends on the legacy financial infrastructure that is fragmented globally.
Looking at the major crowdfunding platforms today, GoFundMe, Indiegogo, and Kickstarter, they only operate in about 30 countries. And you guessed it, these are just developed countries. The main reason for this is that it relies on payment providers like Stripe, whose reach is limited due to the highly fragmented global payment network and regulated monopolistic financial system.
This also means that the cost of running crowdfunding on this network is very high due to the involvement of many intermediary third parties. The average crowdfunding platform fee is 7% for each successful project.
Another limitation of this reliance on legacy financial infrastructure is that there is not much you can do with your own financial infrastructure. For example, consider the fact that crowdfunding platforms today have a $1 or $5 limit per donation. What if you could instead fund cents, small businesses, or nanocompanies to encourage more people or “crowds” to donate?
All this makes the “public” lacking in the status quo of crowdfunding.
Crowdfunding experience around ‘crypto’
This close reliance on legacy financial infrastructure has led some crowdfunding platforms to migrate to the so-called “Web 3.0” model. For example, Kickstarter decided to write its own crowdfunding protocol on other blockchains due to its reliance on Stripe. This may make sense for equity-based crowdfunding, which allows other platforms and companies to invest in new companies and their ideas.
This could be an interesting experiment with equity-based crowdfunding, but global donation-based, reward-based crowdfunding and peer-to-peer lending are the most relied upon assets in the world, especially when using Bitcoin. Just makes sense.
Bitcoin Experiments: From HOD LING to GIVLING
In 2021, you may have noticed the emergence of crowdfunding projects that showcase social and humanitarian projects in emerging economies. The popular viral product was Bitcoin Smile, which raised 1.88 BTC to support Elzonte dental care. Another recently launched project is Kivéclair, a development project that educates people about Bitcoin in the Democratic Republic of the Congo, which has reached 50% of its target.
These are just two of the few project initiatives that the BTCPay server team supports to help you host and configure your own site.
These use cases highlight the need for a seamless global crowdfunding experience that is powered by Lightning’s Bitcoin and supported by the Bitcoin community.
Most importantly, these examples demonstrate that the Bitcoin community is not just HOD Ling. Jeff Ling.. give dirt sharing love. After all, many of us became Bitcoins thanks to our friends and family who gave us Bitcoins.
Thanks to Heidi Porter and Paula Magall for editing.
This is a guest post by Mick Morucci. The opinions expressed are completely original and are not necessarily BTC Inc or Bitcoin Magazine..