The reach and usage of blockchain as a technology seems to have expanded. Experts believe that financial services sector, besides startups, have upped the usage of blockchain-based solutions to now crowdfund to raise capital and create new business and economic opportunities. As per a research published by Statista, a market search firm, the global crowdfunding market was valued at $13.64 billion in 2021, and is expected to double by 2028 at a compound annual growth rate (CAGR) of 11.2%. “Blockchain carries the potential to ensure crowdfunding, as it can bring transparency and credibility to the entire process. As the benefits of the technology will be available online, the platform will be accessible and anyone would be able to make investments from across the globe. The use of tokens will make it easier for investors to track their investments,” Prashant Kumar, founder and CEO, weTrade, a cryptocurrency platform, told FE Blockchain.
Insights from reports suggest that cryptocurrencies will play an important role in initial coin offerings (ICOs), which refers to an unregulated means to raise funds for a business venture. In 2017, a startup called Bancor clocked $153 million in under three hours through usage of blockchain platform Ethereum, with data showing that the platform received more than 390,000 Ether. “Crowdfunding can be generally done through usage of multiple coins and tokens based on the nature of the project. It is seen that users have an increased trust towards Bitcoin and Ethereum compared to other cryptocurrencies, and display their wallet addresses for funds collection. Use of cryptocurrencies can be convenient for entities in comparison to traditional fiat currencies, with priority directed towards ideas and technology,” Sathvik Vishwanath, co-Founder and CEO, Unocoin, a cryptocurrency exchange, said.
Moreover, use of blockchain is expected to reduce operational costs. Market-based insights show that decentralised funding will allow investors to make transactions with zero brokerage fees. According to GeeksforGeeks, a computer science portal, blockchain-based crowdfunding can provide the benefits of decentralisation, equity access, flexibility, and a peer-to-peer transaction system. “With advancements in applications such as smart contracts, businesses will be able to make use of non-fungible tokens (NFTs) to generate income for themselves. It will help businesses with scalability, security, marketing, and loyalty in customer base. Furthermore, investors can manage their supply chain and help automate manual jobs,” Vivaan Kapoor and Rahul Kapoor, co-founders, CryptoRunners, a NFT-based platform, stated.
Also Read: On-chain asset tokenisation sector to reach $16.1 trillion valuation by 2030: Report