Crowdfunding is an intriguing concept, allowing any individual or business in the world to raise funding for their project, without having to rely on a select group of financial players. Every individual can become an investor in a company through crowdfunding platforms, which creates an interesting spin on the traditional business model. At the same time, governments around the world have been looking at ways to regulate this concept, and protect consumers from financial harm.
Incentivizing And Rewarding Participation At The Same Time
What makes crowdfunding such an interesting concept is how it can both incentivize and rewards participants for pledging money to a cause. The incentive comes in the form of supporting a cause or project they like, by kicking a small – or large – contribution their way. At the same time, most crowdfunding platforms work with pledge perks, rewarding every individual baker with a digital or tangible gift.
Even though not every crowdfunding story has a happy ending, the number of successful campaigns is certainly not something to sneeze at. Most of that success comes in the form of fans of a person or project being dedicated to seeing the crowdfunding campaign succeed its goals and, in most cases, even transcend them by quite a margin.
Video games present an excellent scenario for the success of crowdfunding campaigns. Based on the amount an individual pledges to the campaign, they will either get a copy of the game or even become a part of the game universe itself. Having your name on an in-game item for the world to see is an amazing feeling and was previously never possible unless one was a very wealthy investor.
This type of business model could very well transcend beyond the “niche market” of games, books, and platforms. In fact, some people expect crowdfunding to become a major part of how movies are produced in the future, with the fans of the project having their say in how things should be directed. Plus, a cameo in a movie or tv show would not be outside the realm of possibility either, thanks to the concept of crowdfunding.
Bitcoin, a popular digital currency, takes the concept of crowdfunding one step further and makes it a truly global concept. Bitcoin operates across borders and brings financial services to people with and without a bank account or credit card. Doing so creates true global crowdfunding campaigns, which will be of great value to any industry looking to explore the boundaries of crowdfunding their next project.
Government Regulation Could Become An Issue
As is the case with any new form of technology or innovation, regulation and legislation will have to run behind the curve for quite some time. Up until this point, the rules regarding taxation of crowdfunding “earnings” remains unclear in just about every country in the world. Furthermore, companies creating crowdfunding platforms should be taxed in a different way as well, although no unified regulation exists on that front either.
It is only a matter of time until governments catch up with this trend and slap on a framework of laws that taxes crowdfunding campaigns. However, officials should tread carefully in this market as the innovative growth should not be hampered by any means. It will take time until a proper regulation is formed regarding crowdfunding, but the concept will not be waiting for policymakers to catch up.
What is your opinion on crowdfunding? How will this concept evolve over the next few years? Let us know in the comments below!
Source: Crowdfund Insider
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