Interest in global tokenized crowdfunding – the next big thing in cryptocurrency – is growing fast. The Competitive Enterprise Institute recently published an article entitled “Crypto and Crowdfunding Could Spur U.S. Economy”. According to the article, the relatively new concepts of crypto and equity crowdfunding could have the power to create new economic systems, which decentralize the traditional value transfer and capital raising methods. It goes on to explain that these systems could soon become the new economic norm, stating, “these changes would spur an explosion in decentralized, crypto-centred economic activity, all under federal anti-fraud protections. New economic models are possible and fast approaching”. With a crypto equity crowdfunding system tipped to change the economic norms as we know them, the growing curiosity comes as no surprise. Here are a few answers to come of the most common questions surrounding the crowdfunding crypto revolution.
What Is Crypto Crowdfunding?
Crypto Crowdfunding uses the process of tokenization to create a digital version of company shares built on blockchain technology. Tokens (ie. company shares) can then be bought and sold as quickly and efficiently as Bitcoin.
This decentralized crowdfunding system will solve many of the challenges associated with the current crowdfunding system. In fact, Dacxi believes that tokenization has the potential to turn the crowdfunding industry into a $1trillion sector.
Right now, the crowdfunding industry is worth just a tiny fraction of that amount. Under today’s system, access to investment opportunities is generally restricted to qualified investors (typically high-net-worth individuals). Legal restrictions mean most smaller investors are shut out, which has created an unequal-opportunity environment. With a global tokenized crowdfunding system, entrepreneurs will have access to a global base of potential investors. In turn, investors will have access to previously unavailable investment opportunities.
This will unlock the true global potential of crowdfunding, and make millions more businesses, products, and ideas a reality.
How Does Crypto Equity Crowdfunding Work?
Today, if you want to raise money for your project online, you would typically go through a website like Kickstarter. You create a project, set a goal and deadline, and then do your best to spread the word.
Crypto equity crowdfunding is different. Instead, you issue digital tokens which represent company shares. People can buy as few or as many tokens as they like, and they can be traded on crypto exchanges. This cuts out a majority of the friction and barriers associated with raising capital, turning it into a smooth, seamless, and speedy process. This makes crypto equity crowdfunding a powerful capital-raising option for businesses the world over.
What Are The Best Crypto Crowdfunding Platforms?
When it comes to crypto crowdfunding platforms, there’s really only one player worth mentioning; Dacxi. Dacxi isn’t just playing the game, they’re creating it, by pioneering the revolutionary Dacxi Chain.
The Dacxi Chain is the world’s first global tokenized crowdfunding system. Based on a worldwide network of over 100 Crypto Wealth platforms, the Dacxi Chain will provide essential services like regulated deal origination, due diligence, promotion, investment, custody and liquidity. The Dacxi Chain is powered by Dacxi’s native cryptocurrency, Dacxi Coin. Dacxi Coin will pay for blockchain fees on the Dacxi Chain and be used for exchange transactions.
What Is STO Crowdfunding?
There are various types of crypto crowdfunding, all with their positives and negatives.
STO is one of these forms of crypto crowdfunding.
STO stands for Security Token Offering.
With STOs, the token represents investments into an underlying investment asset, such as stocks, bonds, funds or unit trusts. The security token is an electronic instrument representing the title of ownership, recorded on a blockchain.
Because STOs are tied to complex securities regulation, they can be cumbersome. As a new and innovative concept, the crypto crowdfunding industry is still in the process of regulation. With that in mind, it will be interesting to see which direction the STO approach takes.
A Use Case Example: Real Estate Crypto Crowdfunding
So, how does token crowdfunding work in action? Let’s say a developer wants to build a resort hotel, and they decide to use crypto crowdfunding to help finance the project. They would start by making an offer to investors and creating tokens or coins that represent shares in the resort.
The developer will then get access to many smaller investors, who are keen to provide funding for the resort hotel development. Rather than having to jump through numerous hoops and endless paperwork, investors simply buy tokens that represent shares. They can choose to buy as little or as much fractional ownership as they want – which means there’s no financial barrier to entry.
The entire compliance process of deal origination, due diligence, promotion, investment, custody and liquidity is bound up in the crypto crowdfunding system. It’s a simple and elegant way to connect investors with the high-potential investment opportunities they’ve been looking for.
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