Better Crowdfunding with Cryptocurrency
If you ever backed a Kickstarter project that failed, you understand one of the biggest problems with current crowdfunding platforms: there’s no guarantee that a funded project will deliver, and no recourse for backers if it doesn’t.
Even so, the crowdfunding market continues to boom. In fact, more money will be raised on crowdfunding platforms in 2017 than by traditional venture capital firms.
FundYourselfNow (FYN) is a new startup that plans to create a better crowdfunding platform using cryptocurrency as its backbone.
The FYN crowdfunding platform should offer the following advantages over traditional crowdfunding platforms like Kickstarter:
- Milestone-based progressive funding. A big criticism of most crowdfunded projects is that there is no guarantee that backers will get any value for their money. Many Kickstarted projects have failed to deliver, meaning their backers lost everything they pledged. FYN will limit backers’ risk by pegging funding to project delivery milestones. For example, if a project fails to meet an important milestone backers can vote on whether funding should be continued or not. After a milestone has been missed, if 60% or more of the backers vote to cancel funding, all remaining funds will be refunded to the backers. This will provide much more motivation for project creators to actually deliver. Everyone needs a deadline.
- Help from mentors and community members. Many crowdfunded projects fail because their creators lack certain key skills. FYN will use a bounty system to reward members of its community for their help on funded projects. Members can provide marketing and creative support or consulting advice to project creators in return for cryptocurrency tokens. In addition FYN plans to hire experienced mentors and legal advisors to support project creators.
- Project vetting. Before a project is listed for crowdfunding, FYN plans to review the project proposals and do identity verification on project creators as necessary. This should prevent frivolous projects or obvious scams from being listed.
- Lower transaction costs. This fee for listing a project on FYI will be 5%, the same as on Kickstarter. However Kickstarter costs also include a 3% to 5% transfer fee for all funds pledged to a project. That’s because Kickstarter needs to cover transaction costs from credit card processors. Replace credit card with payment. Because FY and funds projects using ether or FY and tokens they don’t incur the same payment processing costs.
- Faster funding. Because FYN will not have to rely upon traditional payment processors like credit card companies or PayPal, project funding should happen more quickly.
- Funding value can increase over time.
The value of project funds can increase over time, assuming the value of the underlying Ether and FYN Tokens increases. FYN is taking steps to support the long-term value of their currency by instituting a token buyback program. They also have plans to incorporate less volatile currency options, such as
FYN will be built on top of the Ethereum platform, and will also create its own FYN Token currency for use by its projects and the FYN community.
The FundYourselfNow Initial Coin Offering (ICO) has already begun, and it runs until July 31, 2017. They have already collected over a million US dollars’ worth of Ether, so it looks like this venture will be viable. The FYN team has already built an alpha version of their software and you can walk through a demo on their website. It’s definitely worth checking out.
Rob Dixon @icoinformer