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Bitcoin Crowdfunding – Things to Know

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Cryptocurrencies have rapidly changed how people transact, facilitating instantaneous, secure, and low-cost transactions worldwide. Those qualities have made Bitcoin seem like a more reliable transaction currency than fiat money. Today, it is increasingly becoming the preferred currency for entrepreneurs to crowdfund their investment projects.

However, using Bitcoin for crowdfunding comes with unique benefits and challenges that you should know before opting for it. The following article highlights the essentials of Bitcoin crowdfunding to keep in mind.

What is Crowdfunding?

Crowdfunding refers to collecting small capital contributions from several investors to finance a startup. Crowdfunding websites have easily accessible vast networks of investors that you can leverage to get the required capital. Crowdfunding expands the investors’ pool outside of the traditional circles of venture capitalists, friends, relatives, and owners. The approach is popular among entrepreneurs with startup ideas but lacks capital.

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Using Bitcoin for Crowdfunding 

Bitcoin offers businesses and individuals robust tools to raise funds for existing and upcoming projects. Instead of relying on a single investor or source of funds, a crowdfunding campaign enables you to decentralize the funding process. That makes Bitcoin the ideal currency since it is also decentralized. Thus, Bitcoin crowdfunding offers better exposure to a larger pool of global investors, allowing you to raise funds easily and quickly.

However, remember that processing Bitcoin transactions through an exchange will attract minimal fees. If you are interested in bitcoin trading, check out automated software for crypto trading.

Some people usually consider Bitcoin a tax-free funding approach because many countries do not tax Bitcoin. However, research the crypto regulations in your state, region, or country to determine your tax obligations. You may not pay tax for receiving Bitcoin, but converting the funds into fiat currencies may carry tax implications. Nevertheless, the tax rates will mainly depend on the total amount of Bitcoin received.

Bitcoin crowdfunding offers greater autonomy, allowing you to get funding from potential investors worldwide without external intervention. Besides, Bitcoin payments are also irreversible. Exploiting that freedom by listing fake projects to swindle investors might tempt some people. However, never do that because Bitcoin’s blockchain validates all transactions on a digital public ledger that investors can use to track you down.

Although Bitcoin users’ addresses do not reveal their real identities, various ways exist for tracking bad actors. So, it would be advisable to avoid any activities that could jeopardize your funding, including giving assurances about a project you do not intend to fulfill. Cross-check your project listing to make sure the details are accurate and precise.

Many crowdfunding platforms are legitimate and have delivered their promises. However, be cautious because several fraudulent crowdfunding platforms also exist. So, take time to research a few crypto-friendly crowdfunding platforms online. Read the customer testimonials and reviews for insights about their services and reputation. Then, choose a reliable and trusted crowdfunding platform that accepts Bitcoin.

Crowdfunding websites usually support various projects that vary from one platform to another. So, you should also check if the chosen crowdfunding platform supports your project or startup. Raising funds for unique and low-cost projects can be quick. Still, it could take some time to achieve the financing goals for complex and capital-intensive projects like blockchain technology development.

Bitcoin crowdfunding may be a new concept to many people. However, it comes with numerous benefits, enabling you to raise funds from a larger pool of global investors with greater convenience and security.


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