While searching for Bitcoin’s “killer app”, there are a few different options to consider. Something like OpenBazaar could be perfect for bringing Bitcoin’s decentralized nature to various marketplaces while a Bitcoin rewards card could offer an incentive for more people to choose Bitcoin as their…
On the other hand, Bitcoin also offers some intriguing upgrades for the crowdfunding industry. The basic nature of how Bitcoin works means crowdfunding is more practical for certain situations, and Lighthouse allows creators and supporters to connect directly rather than through a third party.
One of the issues with the crowdfunding industry right now is the friction between donors and the creators of the campaign. In the traditional, Kickstarter process, a donor has to sign up for an account on the website, deposit some money, and have multiple other parties take their cuts of the donation. With Bitcoin, the creator of an idea just needs to publish a Bitcoin address or QR code in a public place to receive donations. The best example of this would probably be when a college student placed a QR code on national television with the message “Hi mom send [bitcoin].” He ended up raising more than $20,000 when it was all said and done.
It’s likely that traditional payment processors will adopt this simple payment scheme in the future, and we already see a bit of it with Apple Pay. The difference between Bitcoin and these other options that will undoubtedly pop up is that you don’t have to worry about dealing with any third parties. Transactions are made directly between two parties, and there’s no reversing the payment at a later date.
Micro donations are another interesting aspect of Bitcoin crowdfunding. With the traditional crowdfunding options, donations under a dollar or two aren’t very practical. For example, there is currently a fee of over 30% of the total tip amount when supporting an artist via Google Wallet on YouTube. For certain campaigns, getting 10,000 people to donate $0.10 will be a better option than getting 200 people to donate $5. Microtransactions are also made more practical and secure with payment channels.
Another aspect of Bitcoin crowdfunding that may be the most interesting is allowing supporters of a campaign to vote for certain features with their bitcoins. The best example here would be if YouTube’s Epic Rap Battles of History decided to have their subscribers vote on the next rap battle with bitcoins rather than shouting out suggestions in the comments. The creators of the show could then keep the bitcoins, and the end result is that their audience has been able to crowdfund the production of a new episode. It wouldn’t be an exact science at first, and there needs to be some more experimentation with this concept.
One final point that needs to be made when it comes to the potential of Bitcoin crowdfunding is that it could allow communities to hire people for certain tasks in a collective manner. The eventual conclusion of this idea is that it creates a more efficient system of dividing up resources. An illustration of this point would be a situation where there is a pothole on the street shared by three neighbors. One of the neighbors is extremely distressed by the fact that he has to see the pothole every day, another finds it mildly annoying, while the third seems fine with driving around it every morning on his way to work.
The neighbor who is overly annoyed with the pothole could create an assurance contract on Lighthouse that says someone can be hired to fill the pothole for two bitcoins. He’s willing to start the funding with a whole bitcoin of his own, and the other two only have to donate a single bitcoin between them. Perhaps the guy who isn’t much annoyed by the pothole would be willing to donate 0.25 BTC to get it patched up. This kind of solution has obviously existed in the past (mainly in the form of government), but Bitcoin and other decentralized technologies allow them to work much more efficiently.
Images from ERB and Shutterstock.
Last modified: January 8, 2020 3:17 PM UTC