A Blockchain Use Case for Crowdfunding

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Helping others is as old as the Bible itself. Ancient societies have a history of helping one another to a greater degree, or to a lesser degree. Over the years societies have helped one another. In America, organizations like the Optimists, Elks, or Lion’s, have projects to help others in their communities, and so too do churches and synagogues have assistance programs to help those in need.

With the advent of the internet, it’s not surprising that it would become a medium for helping people. In fact, the first recorded successful instance of online crowdfunding occurred in 1997 with an unlikely recipient—a British rock band.

They funded a reunion tour through online donations from fans, and as they say, the rest is history. The internet is replete with online crowdfunding with crowd-funders like GoFundMe, or Kickstarter. They are designed to raise funds for charitable purposes or to raise money to fund for-profit projects. One way to view crowdfunding is that it is “the practice of gathering financial support for a project by raising small amounts of money from a lot of people.”

Crowdfunding Continues to Grow

According to Peter Daisyme: “Crowdfunding has skyrocketed in popularity over the past decade or so. There are more than 375 crowdfunding platforms. North American crowdfunding volume totaled $17.2 billion in 2017.” Moreover, it is generally used for funding creative projects, social entrepreneurship, medical expenses for those without insurance, or for business startups—in lieu of applying for a loan from the Small Business Administration.

We are now seeing the next iteration of crowd-funding, and that is the use of blockchain for crowdfunding. (Cointelegraph)

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Blockchain Technology for Crowdfunding

According to Tania Grebennik, (Medium), the current crowdfunding system is built on a website, credit card payment system, and email. While this system works, it wasn’t designed to handle crowdfunding projects. Here’s how blockchain can work for crowdfunding.

Blockchain technology provides the base for popular cryptocurrencies like Bitcoin and Ether.

The blockchain is a robust ecosystem. It uses decentralized ledger technology to store information in immutable blocks. Great for crowdfunding.

The ledger in a blockchain system supports accurate record keeping of all campaign activity. It can track the activity before a campaign starts, during, and after the campaign is funded. The inherent visibility helps everyone involved: creators, backers, and administrators.

By having an immutable receipt, you have proof of your contribution and the reward that is due to you. This is something that cannot be guaranteed by the current system.

According to Daisyme, because blockchain is decentralized, crowdfunding will not need to be dependent on any platform or combination of platforms to allow creators to raise funds. Crowdfunders will not be held to the rules, regulations, or the apparent mindless policies of traditional internet based crowdfunding platforms. That means any project can have the chance of being seen and getting funded.

With blockchain enabled crowdfunding platforms—the crowdfunder can have access to equity. Blockchain can use tokenization to give investors equity or some type of ownership asset. For instance—the inventor who plans to develop multiple new products with the raised funding—could give each new investor a “small ownership stake in the company, commensurate with the amount they contribute”.

With blockchain enabled crowdfunding platforms, crowdfunding can be universally available. Any project could potentially get funded. Anyone with internet access will be able to contribute to a project.

Moreover, with blockchain, the user experience for the donor is easier. Instead of requiring the user to pay with a debit or credit card, the user can use a blockchain crowdfunding platform that supports fiat payments—and cryptocurrencies. This will open crowdfunding to anyone with a digital wallet. (Grebennik)


Blockchain technology and distributed ledger technology is already seen as having possibilities to rock the business world. With use cases applied to health care delivery and charitable applications, it has the promise to be a social good. With crowdfunding, blockchain has the potential to provide innovative solutions to make the world of raising funds for those in need available where it wasn’t available before.


Samuel H. is an author, writer and speaker with over twenty years in the educational technology sector.

Contact Samuel


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