The Promise and Pitfalls of Crypto Crowdfunding

CoinSummit London saw a number of notable speakers, panels and announcements during its two-day run this July, but those issued by Swarm, a crowdfunding platform that seeks to use cryptocurrency to empower industry businesses, may have passed under the radar.

One of the primary reasons behind the rising interest in crowdfunding is that as the price of bitcoin and other altcoins becomes increasingly stable, entrepreneurs can no longer steadily rely on the increasing value of these assets to fund their ideas.

One of the most notable examples of cryptocurrency crowdfunding and its current issues was provided this year by decentralized platform provider MaidSafe, which raised money via cryptocurrency, converting bitcoin into a token called MaidSafeCoin.

Unlike other crowdfunding efforts, the Swarm platform also claims it allows investors to have voting rights with the digital tokens that it dispenses through Vennd.

One risk with crowdfunding is that the collecting party may not use the money it raises for the express purposes detailed during fundraising.

Still, with any cryptocurrency crowdfunding opportunity, there remains the possibility that the issuers of the assets may default.

Swarm is not the only project seeking to tackle this cryptocurrency crowdfunding challenge.

Another unsolved concern is the fiduciary duty that crowfunders might take on when raising money with cryptocurrency in bitcoin's biggest market to date: the US. The state of Washington, for example, has decided to take companies to task for failing to provide a return on investment for investors who participate in crowdfunding campaigns.

Cryptocurrency crowdfunding is a way to access funding without knowing accredited investors.

AngelList's Ravikant seems fairly certain that there could be a divide in the future, with above-the-board crowdfunding sales and perhaps a 'dark web' of funding both proliferating.