Bitcoin – Model for CrowdFunding


Bitcoin – Model for CrowdFunding

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Courtesy of: MrBTC.org

Bitcoin which is not just a protocol or money, can also be seen as a new business model for open Source. In prior to bitcoin the usual process was to raise money, write a software, distribute the product, build a business model and work towards the liquidity. With the bitcoin model for crowding funding the process remains the same except the software.

The process for bitcoin model crowdfunding goes this way:

  • Write software which powers a completely distributed network in which any node can participate anonymously.
  • Allocate the scarce resources in the network with a scarce token, such as an App coin. Users need this app coin to use the network and the owners of the scarce resources get paid in App coins.
  • Pre mine and early mine these App coins and also keep some non-threatening amount. These act as the share for the company, equity will be appreciated in value if the network is adopted.
  • The network operators are given the ability to collect new App coins in proportion to their contribution. A small amount of each transaction is routed to the developer foundation. The revenue generated is used to pay for operations and bounties for the ongoing developments.
  • As the usage of network increases, the equity value and revenue also increases.
  • The App coins can be bought by anyone, anywhere and anytime just by shipping the code and ringing the IPO bell.

This is a true crowdfunding, where the users are funded in proportion to their usage. The early adopters, network operators and developers are rewarded upside. Usually in economics the artificial scarce token used to allocate scarce resources is called as money. This means Bitcoin is a crowdfunded OSS to run an Economic network. A new generation of App coins can be created as a open source software with crowdfunding into existence and go public on day one. These App coins can run network when Bitcoin may not work, or when separate funding and compensation is needed.

The tor network is slow because it relies on the volunteers to relay the traffic. Let us crowfund the Torcoin, where the users in relay will pay in Torcoins and the operators in the relay get paid in Torcoins. The founding developers will collect equity when the Torcoins are first mined and sold. The non-founding developers and network operators are paid revenues from the newly mined coins and transaction fees.

Can a Bitcoin be used instead of a Torcoin? Bitcoin transaction speed is slow for a dynamic network allocating bandwidth, which is 10 to 60 minutes is too far and long to negotiate with the relay, also the payments have to be anonymous. Sa fast clearing and full anonymous variant is needed something similar to Zerocoin which can clear a block in 12 seconds.

What else can be allocated in a network? A namecoin is already working on the distributed DNS.

Can a striped, encrypted, high availability data store be built using a boxcoin which pays as disk availability? Can a caching infrastructure be built using a cache coin which pays edge nodes using unused resources for static content and large cache? Are there any more applications similar to Bitcoin that can map to a real world and bypass any network resources?

What is the role of a Bitcoin in the world with numerous Appcoins which are easy to create, integrate and crowdfund?

Bitcoin is actually used as the currency of choice in many cases, where its slow transaction clearing process and pseudonymous nature are not an issue. Also most of the resources in the world are not networked software which can be benefited from the App coins.

Some App coins just acts as a protocol layer on of the Bitcoins so as to reward the creators, operators and early adopters of the App coins network. For example PKI coin may be a financial incentive with a security outsourced to Bitcoin mining pool. The entry and exit to PKI coin is through Bitcoins. In case where the bitcoin blockchain availability is insufficient such as Torcoin then bitcoin will be a reserve currency in sorts for moving in and out the Torcoin.

Bitcoin is a model and platform for true crowdfunding which is more than money and more than protocol.Β  It has powerful tools to raise the funds for existing or upcoming projects. Rather than depending on one major source of funding or one investor, a crowdfunding campaign allows decentralizing the funding process by acquiring supporters and backers to provide money. Accepting bitcoin as a mode of payment for the campaign helps to decentralize things even further and reaches the global audience.

Considering the fact that bitcoin is not taxable in many countries, most of them view it as a safe way for tax free funding. For the Bitcoin enthusiasts most of the crowdfunding projects have been legitimate and were delivered on promises. Depending on the type of project listed, it may take additional time to reach the goals, especially when blockchain technology is involved.

The crowdfunding platforms are not being used for the right reasons; few people view it as a way to get some funds quickly, without the need to pay back. But most of the platforms implement security against misuse; there will always be a minor chance of the project not being delivered on the promises made. Crowdfunding has its own features such as it is self-hosted, open source and no fees required, it provides real time updates, The contribution it gets is its perks, Includes customizable campaigns, Provides adjustable goal contribution methods.

The goal of crowdfunding is to use Bitcoin pay and carter the content creators, developers, charities and enterpreneurs who are in need of funding and take their product or content from dream to reality. The app can be easily altered to design the page which fits the needs. The layout and basic features may be similar to that of centralized platforms. Al the money that is raised goes directly to the crowdfunding platform without the intervene of a middle man.

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