When founders of Drivezy, a peer-to-peer vehicle sharing platform, wanted to expand their services and add cars onto their platform, the biggest challenge they faced was raising more funds. ‘Instead of approaching Venture Capitals, which would have resulted in further dilution of our equity, a couple of Japanese investors suggested an ICO (Initial coin offerings),’ explains Abhishek Mahajan, co-founder of this Gurugram-based Venture.
Challenges of Traditional Business Funding
The majority of traditional business funding falls into one of three categories: self-funding, bank funding, or venture capital.
The issue is that self-funding is quite restricted for the majority of individuals. A bank funding requires a pre-existing firm with excellent sales and cash flow. And venture capital funding almost often requires a product or service with universal appeal.
As a result, traditional capital for startups is limited and difficult to come by. It has the ability to stifle the growth of even the most promising goods and services.
Revolutionary Crypto Crowdfunding
Cryptocurrencies are quickly becoming mainstream, with major financial institutions such as JP Morgan (JPM) already providing crypto exposure to its clientele. Initial coin offerings, or ICOs, are a new way for startups to raise funds.
What is crypto crowdfunding?
Let us first understand the word ‘crypto’. Crypto short form for Cryptocurrency is a type of digital currency that uses a decentralized system to keep track of transactions.
The most prominent cryptocurrency is Bitcoin, which was launched in 2009. Ethereum, Dogecoin, Ether, Avalanche, Shib Coin, Pancakeswap, and Shiba Inu are some of the various cryptocurrencies that have emerged over time.
Blockchain is the technology that powers cryptocurrencies, but many believe it will have implications in other sectors as well. Cryptocurrencies are rapidly gaining popularity in India, as they are in other parts of the world. Crowdfunding crypto projects is the latest trend in the start-up investment landscape.
Initial Coin Offering
In a traditional investments scenario, the founders issue an initial public offering (IPO). Whereas in the crypto world instead of issuing shares, the issuer will generate crypto-tokens that will be distributed to investors. In return for tokens, investors will deposit any well-known cryptocurrency (often bitcoins or ether) into the start-up.
Infrastructure to enable Crypto Crowdfunding
Blockchain is a relatively new technology. The first blockchain was launched with Bitcoin in 2009. Because the industry is still developing, new and innovative structures are being created to take advantage of it.
In the sphere of crowdfunding, OpenLedger is one of several initiatives that leverage blockchain technology.
For crypto equity, OpenLedger works the same as the stock exchange. Companies may raise cash by launching an ICO on OpenLedger, and then exchange their crypto equity on the platform.
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Best crypto crowdfunding platforms
Like regular Crowdfunding platforms, Crypto Crowdfunding provides the financial lifeline to startups who are trying to generate funds to support their unique ideas.
1. Wefunder: Launched in 2012, this was the first crypto crowdfunding platform to accept bitcoins. When bitcoin investors request reimbursement, the amount is calculated based on the current market value of the coin. According to their website, 625,350 investors contributed $137 million to 386 businesses.
2. Brickblock: It’s a cryptocurrency crowdfunding platform that lets clients use their coin balance to invest in ETFs and real estate. It was established in Berlin in 2016. (Germany). This also allows for cross-border investments and access to the capital market at all times of the day and night.
3. QuantmRE: Started in the year 2017, it is yet another best crypto crowdfunding platform. To get started, investors can buy tokens. This platform is built on blockchain technology.
4. QuiverX: This ecosystem is an ideal place for crowdfunding crypto-based startups.
On this platform, a start-up’s equity is offered to digital asset investors in the form of equity tokens.
5. RealBlocks: Established in 2015, it is built on powerful blockchain technology and is decentralized. It enables crowdfunding for cryptocurrency and permits all investors to participate in real estate-related initiatives.
Cryptocurrency sector in India
There appears to be little coordination across countries as far as policy and regulatory responses to digital currencies are concerned. The responses range from outright rejection to complete approval, with a broad spectrum in between.
The Central Government indicated in Parliament on Monday (December 6, 2021) that it has no intentions to enhance the cryptocurrency sector in India, ahead of the much-anticipated presentation of the Cryptocurrency Regulation Bill in India.
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Crypto Future Outlook
Without a question, the future holds a plethora of opportunities for fintech disruptors who use blockchain technology to create new business models and methods of doing business. But would you be okay if you woke up one morning to find that crypto had been prohibited by developed countries and had become worthless? So, keep your crypto investments minimal, and never prioritize them over other financial goals such as retirement savings and debt repayment.
FAQ’s
Q. What do you mean by NFT coins?
A. Non-fungible tokens, or NFTs, are crypto tokens on the blockchain with unique identifying codes and metadata that distinguish them from each other. In contrast to cryptocurrencies, they cannot be traded or exchanged for equivalents.
Q. Is cryptocurrency a stable currency?
A. Investing in digital currencies is risky, but it can also be incredibly lucrative. If you want high access to the demand for digital money, cryptocurrency is an excellent investment, while stocks of firms with cryptocurrency exposure are a safer but perhaps less rewarding option.
Q. What is the best way to generate money using cryptocurrencies?
A. Here are six ways to profit from cryptocurrency: Investing, trading, staking, and lending, as well as crypto social media, mining, airdrops, and forks
Q. Which bitcoin crowdfunding initiatives have been the most successful?
A. To date, Ethereum, Factom, and Augur have been the most successful.
