On the 15th of April, the world watched in horror as 850 years’ worth of history was ablaze in front of their eyes. The unfortunate fire at the Notre Dame Cathedral in Paris, upset people from all across the world, but it also witnessed people’s generosity in those trying times towards the city of Paris.
Soon after the incident, there was an immediate scramble for funds, to help rebuild the age-old cathedral. Close to 50 crowdfunding campaigns sprung up in no time, to help raise funds from people around the world.
Despite receiving funds and pledges from French billionaires like François-Henri Pinault and Bernard Arnault, multiple crowdfunding campaigns popped up on the website of GoFundMe, a popular crowdsourcing platform.
There arose certain controversies on how these funds could be better utilized elsewhere, seeing that the restoration efforts had already raised $300 million from the two pledges mentioned above. But nevertheless, it was indeed a sight to witness the benevolence of people from across the world, during a time of crisis.
Unfortunately, with the surge of multiple crowdfunding campaigns, arose a potential threat of crowd frauding. Crowdfunding is a multi-billion dollar industry. However, research shows that up to 85% of successful campaigns will delay delivery, 14% will fail to deliver outright, and around 67% backers decide never to fund again.
According to verified Kickstarter Statistics, approximately US $500 million have gone to failed projects on Kickstarter alone, and less than one-third of their 15.7 million users have supported a second project. The numbers compel us to ask a burning question, is the crowdfunding system broken?
If one is harboring the ideal notion that people aren’t twisted enough to monetize on an international tragedy such as this fire, then they are mistaken. As soon as multiple fundraising efforts cropped up, the Federal Trade Commission was quick to release a blog post, detailing how scammers are on the lookout to manipulate people’s emotions towards the destroyed cultural and religious relic, in the hopes of extorting money out of them.
The scammers can go to great lengths to ensure that their campaign seems authentic. In many previous instances such as the Nepal Earthquake in 2015, the Boston Marathon Bombing and the outbreak of Ebola virus, etc. scammers have tried to appeal to the emotional side of people by making phone calls or sending emails, so as to extort donations out of them.
Two major crowdfunding giants, US-based Kickstarter, and Indiegogo are also susceptible to the general problems that plague this industry. The issue remains that most crowdfunding platforms only require that campaigners make a “good faith effort” to deliver on their promises.
So if a project fails entirely, or is delayed by months, the backers do not get their money back and there is a lack of accountability. Sure there are ways to employ more caution while donating, like carrying out a solid background research on the project and the creators, but often people find these options too cumbersome. Also, bad press can be easily buried with the help of some backers, who are in on the fraud.
So how do we architect a better system of crowdfunding, that ensures the presence of trust and accountability? There is one crowdfunding platform, by the name of Pledgecamp, that is using blockchain technology and the concept of decentralization to tackle these problems.
Pledgecamp envisions to introduce Crowdfunding 2.0 to the world, with the vision of building an ecosystem that offers support to all parties involved. They are using blockchain, smart contracts, and their own token economy, so as to bring in a degree of transparency and accountability to the ecosystem.
So what is it that they are doing differently from the likes of Kickstarter and Indiegogo? Here are some key differences highlighted below:
By using blockchain technology, they are establishing a publicly verifiable identity of the projects that list with them. Their use of smart contracts will enable backers to track and keep tabs on the fund movements and ensure that their money reaches the right destination. Also, what makes Pledgecamp stand out is that it is so much more than just a platform to raise funds for projects.
It is additionally operating as a Market Network and a Knowledge Center. The former is a decentralized marketplace for services where creators can hire professionals to work on their projects, while the latter will catalog the expertise of the crowd specifically as it pertains to entrepreneurship, product development, and crowdfunding.
It has also introduced a unique security feature that is completely unprecedented and does not exist in any other crowdfunding platform. Known as ‘Backer Insurance’, this feature enforces accountability by empowering backers to monitor the usage of their contributions and get their contribution back if things go wrong.
A roadmap with milestones is set up for the creator, which can be monitored by the backers in real time. So one can have full knowledge of whether the project they have backed, is on track. It is important thus to render full support to this novel crowdsourcing platform, in their efforts to create the most trusted and open crowdfunding ecosystem.