Blockchain Based Crowdfunding: How It Works?

The change in the economic environment after the 2008 financial crisis has given rise to the creation of crowdfunding. In the post-recession world, funding policies issued by banks have been increasing and it became increasingly difficult for start-ups and small businesses to obtain credit. People were seeking alternative options like crowdfunding.

 

The funding methodology has been very successful in the past decade and estimated to reach 28.8bn in market size by 2025. Raising funds through crowdfunding platforms is a relatively cheaper and easier process, yet some issues still exist, especially related to security, trust, transparency, and transactions.

 

The solution for these issues is the application of blockchain technology that eliminates current issues with crowdfunding platforms. A blockchain-enabled technology is what the iOWNX platform utilizes to provide a secure, trustworthy and easy to navigate crowd-investing app and website. 

 

Crowdfunding powered by blockchain 

 

Traditional crowdfunding platforms merely depend on how well the app or website functions, credit card payment facility and how secure the process of funding campaigns is. Yet, we have heard of many things that can go wrong such as data breach, funds being hacked, tampering, delays of payments or funds, etc. 

 

Transaction on a crowdfunding platform involves trust between three parties:

 

  1. Businesses requesting funds
  2. Crowdfunding platform functionality
  3. People funding the business

In case of misconduct at any point, there is a possibility of funds being frozen until the issue is resolved. Funds security is not the only issue; data protection is a major concern today where it is an extremely valuable asset. Most platforms will require an abundance of personal information such as age, address, personal photo, gender, nationality, etc. Trust plays a major role when using a web/app-based platform as it is possible that companies can sell or share or leak data and your personal data. In this situation, blockchain technology provides a solution and protect all the parties. 

 

Blockchain provides a powerful and secure way to store information in immutable blocks. Equity-based crowdfunding platforms built on blockchain technology such as iOWNX, utilizes distributed ledger, which allows for accurate data and recordkeeping of all campaign activities before the campaign is launched, during the funding stage and after the campaign is funded. This level of visibility into a project helps all parties involved, including the seekers, funders, and platform administrators.

 

The power of blockchain in the way it works makes it impossible to hack or tamper with the information stored within it, giving users a sense of relief and comfort. By having an immutable receipt, you can have proof of your contribution and the equity that is due to you which is something that cannot be guaranteed by the current system.  

 

Smart Contract 

 

The fundraising process is not easy as it requires trust between many parties as many scams and phoney projects do exist over the internet. Not only that, some legit platforms might not have a secure system in place to safeguard funds between intermediaries that could be hacked, tampered with or lost. Blockchains such as Ethereum provides a secure solution for all. The “Smart Contract” is a computer program or a transaction protocol that is intended to automatically execute, control or document legally relevant events and actions according to the terms of a contract or an agreement. (Source: Wikipedia) 

This groundbreaking commerce technology brings trust to the table as it is written in code that cannot be manipulated or changed, every step is cryptographically encoded and gets executed automatically.

 

The other advantages of traditional contracts: 

Transparency and ease of iOWNX Platform 

 

iOWNX platform is the core system and central place for business campaigns that utilizes the iOWN Token, which has a limited supply, to fund equity-based crowd-investment campaigns. The unique ecosystem will address the execution of iOWNX platform services. Users can access the platform and select the business they are interested in and fund it with the iOWN Tokens. The ecosystem will then digitally and physically execute the transactions and deliver the service outcomes to users in the form of uOWN Tokens and Smart Contract. The uOWN Token is a passive, non-transferable, unlimited supply token that does not have tradable API keys. It is issued by the iOWNX ecosystem and represents the rights to receive revenue from a business campaign with the trust of smart contracts.  

 

To conclude, a blockchain-based crowd-investing platform, iOWNX has a solid infrastructure and ecosystem which is inherently more secure, because you are not entering your sensitive financial information into a browser but utilizing the iOWN Token to fund campaigns. This opens crowdfunding for any person with a digital wallet and access to the internet. The process of funding is much faster than the traditional system as smart contracts can be executed within minutes rather than days, so you won’t miss investments opportunities. The smart contract provides funders with an immutable receipt, which is proof of their contribution and the equity that is due to them. This is something that cannot be guaranteed by traditional contracts and if it is, then it might take months or years through the traditional judiciary system.   

 

You might also like:

 

Is Blockchain The Future of Crowdfunding? 

What is Crowdfunding? 

Understanding the iOWN Token & Platform

iOWN Token Video

The Basic Fundamentals of Blockchain

 

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