Bitcoin and blockchain technology are powerful crowdfunding tools. Please find out how they are transforming crowdfunding.
Bitcoin and its underlying blockchain technology are revolutionary inventions, transforming various financial transaction aspects. Bitcoin has gained immense popularity over the years as people discover its various real-world applications. Crowdfunding is one of the areas where Bitcoin and blockchain usage has increased exponentially in the last decade.
Several businesses and individuals use Bitcoin and blockchain to raise funds for various projects. Unlike the traditional payment systems, Bitcoin and its underlying blockchain technology facilitate decentralized and more secure transactions. However, Bitcoin and blockchain could revolutionize crowdfunding in several ways. Here’s how Bitcoin and its underlying technology transform crowdfunding.
Exposure to a Larger Pool of Investors
Fiat currencies have been the primary currency for crowdfunding for generations. While they still work today, fiat money transactions remain subject to several government laws and institutional restrictions. That limits your exposure to only a handful of investors across your state, region, or country. Thus, it could take longer to raise the required capital, especially for costly projects.
Bitcoin crowdfunding removes such barriers because it is a decentralized currency. Bitcoin doesn’t have any central authority or third party to oversee transactions. Instead, the transactions occur on a peer-to-peer blockchain network between the two involved parties. Thus, you can raise funds from anywhere in the world without anyone restricting you to a single investor or local sources of funding.
Bitcoin and its decentralized network offer you the best exposure to a larger pool of investors worldwide, enabling you to raise substantial capital quickly.
Enhanced Transactional Security and Transparency
Using Bitcoin to crowdfund your project also comes with greater transactional security. Bitcoin’s underlying blockchain technology verifies and validates all the users’ addresses and transaction histories on a shared digital ledger. It assigns unique identifiers to each transaction and secures the data with encryptions. Besides, all validated Bitcoin transactions are non-reversible.
The validation of Bitcoin transactions on a public ledger ensures greater transparency between entrepreneurs, investors, and crowdfunding websites. It enables users to track all transactions, preventing fraudulent and corrupt practices. The Bitcoin ledger’s irreversibility helps to keep away bad actors who may want to defraud entrepreneurs, hence, the enhanced transactional security.
The users’ public addresses are the primary identification elements in Bitcoin transactions. However, they do not reveal an individual’s real identity, making Bitcoin an ideal transaction currency for companies and individuals who may want to invest anonymously. Leading crypto exchanges such as the bitcoin loophole have additional security provisions for investors and entrepreneurs.
Crowdfunding websites rely on a vast network of investors from various online platforms such as social media to raise funds. However, raising funds from institutional investors and individuals in different parts of the world is effort-intensive and costly. Sometimes, investors may even require entrepreneurs to sign contracts and meet face-to-face before issuing funds.
Bitcoin and blockchain technology can help you to avoid all that. The blockchain is an open-source network that can integrate various business processes, allowing crowdfunding websites to streamline operations to meet the unique demands of entrepreneurs and investors. For instance, they can use the blockchain to create and expedite smart contracts between investors and entrepreneurs.
Thanks to the blockchain, Bitcoin transactions usually take just a few minutes to process. That enables entrepreneurs to request and receive funding from investors worldwide at their convenience. The Bitcoin network does not experience frequent delays, ensuring seamless and faster money transfers to those who need it most.
Bitcoin and its underlying blockchain technology are instrumental in revolutionizing crowdfunding. Apart from enabling entrepreneurs to attract funding from a larger pool of global investors, they also facilitate improved transactional security, transparency, and efficiency.