A popular alternative to Venture Capital, is Crowdfunding which is the practice of funding a project. Combining Crowdfunding with distributing technology, known as Blockchain results in Decentralized Crowdfunding. Many entrepreneurs have found rest when it comes to funding of their projects, thanks to crowdfunding Visionaries get to finance business. More to funding projects, crowdfunding the perfect way to build traction, social proof, as well as validation. With lots of brainstorming in the crowdfunding process, one can refine their ideas hence reaching greater milestones.
Compared to centralized crowdfunding, decentralized crowdfunding proves to be more resourceful and advantageous to use. The following are some differences between centralized and decentralized crowdfunding platforms to help prove the above said.
Let's compare the key differences between a centralized and decentralized platform, by comparing some of the leading crowdfunding platforms such as Kickstarter & IndieGoGo to Pledgecamp
Platform’s Organizational Structures
The key and distinctive difference between the centralized and decentralized crowdfunding is the structure of the organization. Centralized crowdfunding involves a centralized executive team tasked with decision-making processes and management. Following a rigid and traditional management system, information is disseminated from the top management to other arms of the business with no lean approach to modern innovation.
On the other hand, decentralized crowdfunding is defined by a well-organizational structure that consists of manifold small executive units that operate in harmony. With such an organizational structure comes close-knit command chains as well as tight testing and feedback loops that are key to the growth mindset as well as rapid innovation.
Use of Blockchain Technology
Unlike the centralized crowdfunding platforms, the decentralized crowdfunding platforms use Blockchain technology, which is crucial to their success. Pledgecamp, a decentralized crowdfunding platform, integrates its operations with the use of Blockchain technology. Through the technology, Pledgecamp has been able to bring greater transparency to its users hence bringing an evolution to the crowdfunding industry. Most of the differences between the centralized and decentralized crowdfunding platforms are centered on the adoption of the Blockchain technology.
Transaction Fees
A smaller transaction fee for similar or better quality output remains one of the factors that make a business have customer’s trust. Kickstarter and Indiegogo platforms charge a five percent fee on all funds raised. For Indiegogo, additional costs involve credit card processing fee of three percent as well as thirty cents per transaction. Also, users of Indiegogo are informed of a chance to face additional charges for a wire transfer of the amounts from the platform to their individual bank account. Kickstarter also charge a three percent for the credit card processing as well as a twenty cents for every pledge made.On the other hand, Pledgecamp leverages smart contracts in a quest to lower their own costs. In return, Pledgecamp reduces the transaction fees for the crowdfunding recipients. Lower transaction fees put Pledgecamp at a competitive advantage over Kickstarter and Indiegogo, alongside other centralized crowdfunding platforms.
The Blockchain technology is key in the lowering of transactional fees for crowdfunding recipients through the utilization of smart contracts in paying out of funds once the targeted goal is met. Having adopted the Blockchain technology, the Pledgecamp crowdfunding platform has been on the frontline in helping transformative projects receive funding require their success.
Intermediaries in the Crowdfunding Process
Under the centralized crowdfunding platform, the amount raised ultimately for a crowdfunding campaign is always never equal to the actual amount raised. Middlemen and other intermediaries are the reason for the above claim. The middlemen make a living out of helping the crowdfunding campaigners in the choosing of which platform is the best for them. The middlemen have a share of the money raised hence reducing the final amount of money raised.Luckily, those seek crowdfunding services from decentralized crowdfunding platforms such as Pledgecamp, over those who seek Kickstarter and Indiegogo, as well as identical centralized platforms. The above mentioned is because of the adoption of the Blockchain technology, which automates most of the processes.Ranging from smart contracts to the security features, the Blockchain technology adopted by Pledgecamp calls for no additional fees, nor does it distinguish between these services.In return, the technology makes decentralized crowdfunding platforms such as Pledgecamp cheaper, as well as a one-stop platform hence getting rid of most of the middlemen who siphon funds from the crowdfunding campaigners.
Global Reach-out
Unlike the centralized crowdfunding platforms Kickstarter and Indiegogo, Pledgecamp uses a more global tool-Blockchain technology- to enable the firm to has its product worldwide. Through a global reach-out, Pledgecamp assists extend wealth creation even to the remote areas of the world, including Sub-Saharan Africa. Decentralized crowdfunding platform uses cryptocurrencies to pare down barriers to crowdfunding people from whatever corner of the world. Installation of communication systems in even the world’s remote areas, stories about the needy who require crowdfunding for some help is achieved. Some of the communication systems to install in such areas include crypto-to-fiat conversion systems, the internet, as well as translators.
Final Thought
Given the above differences, it is quite evident that the decentralized crowdfunding platforms are an advantage over the centralized crowdfunding platforms. Comparing Kickstarter and Indiegogo to Pledgecamp, one can notice the niche created by the decentralized crowdfunding platforms- the appreciation of the Blockchain technology.
Blockchain technology brings an improvement to the crowdfunding platforms. Pledgecamp integrates the use of Blockchain technology with a decentralized organizational structure. Through that, Pledgecamp has attracted new customers for its cost-saving services and superior features. Additionally, through the use of Blockchain technology, Pledgecamp, just like many decentralized crowdfunding platforms, have been able to show transparency and accountability.
Finally, Pledgecamp global reach-out remains a milestone unachieved by many of the centralized crowdfunding platforms. With a global reach-out, Pledgecamp is able to access even the most rural areas of the world hence having some social impact and earning some great reputation amongst many.