Disrupting Crowdfunding With Blockchain

Blockchain technology is disrupting many industries, and as in the earliest internet days, momentum will gather soon in various other fields, such as business fundraising. Bitcoin and blockchain technology are creating new opportunities in crowdfunding.

Blockchain is like a system of recording information that makes it more protected and secure as it is difficult to change or cheat the system, so it can’t be hacked, and the information is safe.Blockchain is a digital ledger that contains all other duplicated transactions that are further distributed across the entire network of computer systems in the blockchain. 

Every block in the chain includes information about transactions and details about the transactions that have taken place. A record is made, adding up to every participant’s ledger. Multiple participants are managed by a decentralized database known as Distributed ledger technology(DLT).

It is also a type of DLT where transactions are recorded as immutable cryptographic signatures called the hash.

So if any block is changed in the blockchain, it would be immediately apparent if it had been tampered with. Suppose hackers tried to corrupt a blockchain system. They would need to change every block across all the distributed versions of the chain.

In this fast-changing world, blockchains such as bitcoin are constantly growing as blocks and are added to the chain, which also adds to the security of the ledger.

Why is traditional Business funding hard to get?

There are three forms of traditional funding: bank funding, venture capital, and self-funding. Self-funding is limited, and bank funding requires good revenue and good cash flow, which is possible for an existing business with mass appeal for a product or a service, making traditional budgets limited and hard to get for startups or new companies that have been noticed all over the years. As it has a lot of potential, it can inhibit growth even for services and products.

Why Traditional Crowdsourcing Is Still Inefficient?

Crowdfunding allows businesses with great products and service ideas to raise funds from regular people in small investment amounts. When it works, it can give various enterprises a big boost. For example, some companies like Kickstarter, Indiegogo, and Crowdfunder were among the earliest to make it popular.

One problem is that the model is still highly inefficient, even with crowdfunding. About 78% of the campaigns raise 20%  of their goal to be fully funded, while 11% of projects never finish because they could never receive funding. However, this is how blockchain is changing the crowdfunding landscape.

Initial Coin Offerings

Companies are creating their cryptocurrency that is also company stock. Initial coin offerings (ICOs) are new cryptocurrencies on the blockchain platform. It’s similar to how various other crowdfunding platforms work, as funds are collected from a group of people as they post their projects online and are backed up by interested people. 

Investors buy cryptocurrency tokens that represent shares in the project, much like how the stock market works with initial coin offerings. The claims can increase in value over time if the company does well.

​​Infrastructure to Facilitate Bitcoin Crowdfunding

• Blockchain technology is relatively new, and people are not so aware of this technology. In 2009 the very first blockchain named bitcoin was launched. The market is unique and not mature. Still, it is very creative and exciting at the same time as new structures being built are in progress and have many advantages which many businesses can benefit from. 
• For example, the open ledger is one of the many projects that use blockchain technology within the field of crowdfunding. Available registers operate like the stock market but in crypto equity. Crypto can be traded on an open ledger as companies release their ICO through an open catalog to raise funds.
• One of the real-life situations is given below:

With Bitcoin Crowdfunding, Stratis Raised Over $100,000, but it.Their use is slightly different as they created a platform that helps them make blockchain-related apps quickly because it is a new technology. 

• It isn’t easy to get funding, as discussed earlier.Stratis created an ICO to raise funds in 2017 as they accepted only Bitcoin as payment for the ICO and raised more than $100,000 for their technology.
• Another exciting feature of this particular technology is that three people are needed to access the funds, and only one of these works for Stratis. This creates a degree of accountability within the fundraising that might not otherwise be there.

Building a Smart Contract with CRUD Operations

What is Ethereum? 

Ethereum is an open-source innovative contract platform built on decentralized applications (Dapps).

What is Solidity?

Solidity is one of the most famous languages to smart code contracts on ethereum. It is designed for innovative contract programming. It’s syntactically similar to javascript.

What is a smart contract? 

In simple words, an intelligent contract is a piece of code that controls some digital asset. It defines rules for transferring assets and penalties like a traditional contract. The best thing is that it automatically performs these transfers and corrections based on pre-coded conditions without needing an intermediary.

We will go through the code and understand different aspects of CrudApp and basic solidity language programming.

Pragma—

• It tells us which compiler version we should use. It only works after solidity version 0.4.0. only.

Solidity Data Types

Struct–

Using the struct keyword, you can define structures in Solidity. A system is a user-defined data type that can group items of possibly different styles into a single class. Our system will store country-related properties.

• name
• Country
• population

So I used strings to store country names and their leader’s name and uint256 datatype to store their population. We are keeping our countries in an Array. (Where we’ll perform all our CRUD operations).

I also used variables to track the number of countries and then initialize it with a constructor 0.

Events- With the help of events, we can utilize EVM’s logging facility. Use the event keyword following the event name and parameter to define events. We have defined three events for the operations which modify our Storage.

Create Operation –

Now let’s look at our insert function, storing new countries.

After completing the function, this function takes three parameters and returns several entire countries.We are supposed to add basic checks as well.

Talking about ethereum operations and Storage are costly. We declare a temporary struct with the use of memory keyword, and then we will push it on countries array, which is predefined. After that, we log out of the event using the emit keyword. That’s it, a simple, straightforward input in our first entry in the block.

Read operation —

Suppose we want to read what we have stored. So let’s read countries’ data using country names. Our function iterates through entries and returns details if a positive match is found.

Revert() —

Basically, their operations take gas (ether) to run, so we need to optimize that. The revert function checks the condition and reverts unused gas(ether) to the user, and they should use it as a start so your role will use less gas.

Therefore, Solidity provides two functions: they are assert() and require() functions. 

View modifier- 

As observed above, we added in view modifiers in function. We say that the process is not modifying a state and reading the current state itself by adding the view. In simple words, it’s a  read-only function only.

Solidity has many other modifiers that can help us create new modifiers. So a list of conditions for a statement to be considered as “modifying the state”:

• State variables being written to.
• Events being emitted.
• Other contracts are being created.
• Self-destruct is also being used here.
• Ether is sent via calls.
• Calling a function that is not marked view or pure.
• Low-level calls are being used.
• An inline assembly containing specific opcodes being used

Update operation –

Now let’s update our countries’ data.

It takes two parameters and runs a loop to find the country in our country’s array here. If there is a positive match, it will then be replaced with the leader with the user’s input leader.Same way, you can create an updated population function and comment on the response.

Delete Operation —

Now let’s look at the delete operation. In our delete, we remove the country the user wants and replace it with the last entry in our countries array.

Other functions-

We have created some other functions, too—one of comparing the string and the other for giving the length of our array.

Smart contracts are like the trust central of a decentralized app and the autonomous part of the system.Blockchains are not just a database. Blockchain maintains a global state. Every change must reflect every node participating in the network, so changes are costly.

Conclusion 

• To further conclude, blockchain or distributed ledger technologies can benefit energy system operations, the finance sector, other markets, and consumers. They offer disintermediation, transparency, and tamper-proof transactions. Still, most importantly, blockchains provide reasonable solutions for increasing consumers as it plays a more active role in the energy market and monetizes their assets. 
• Blockchains have enabled sharing-economy applications in the energy sector, which has prompted several authors to speak about novel market models and energy democratization.
• Many researchers and commercial parties have proved that there can be an improvement in other sectors like the energy sector. It is a fast-moving area of research and development. Therefore a review of this emergent technology is required to improve understanding, inform the body of knowledge on blockchains and realize their potential.
• If we look from a theoretical perspective, blockchain technology is more like a solution that covers the essential aspects like efficiency, equity transaction, low-cost equity registration, and shareholder voting in the crowdfunding industry by eliminating other legal risks related to funding management.
• Inequity crowdfunding can also help regulators supervise and understand the crowdfunding market. Thus, blockchain applications have good prospects.

For example, blockchain application in equity management is still in the exploratory stage. Many other legal and technical issues are supposed to be resolved soon for better efficiency.

•  A need for blockchain enterprises or companies and market managers to actively cooperate and implement blockchain applications to introduce innovative solutions is much more needed. It needs to deepen its understanding of blockchain technology, value, opportunities, and risks. They should actively promote blockchain applications in the various crowdfunding markets and other digital asset management markets for better chances as economic efficiency and social benefits can be achieved through technical innovation and applications.

Also Read: Disrupting Crowdfunding with Blockchain