Mintme News


Crowdfunding: yesterday, today and tomorrow

Oct 29, 2019

The history of fundraising trace back to the 1700s; first appearing in war bonds needed for funding war effort by collecting money from a large group of people. A more recent history in the 1900s when authors would only write books if they have enough subscribers willing to buy the book

The word "crowdfunding" is relatively new, reported to be first seen in 2006. And even though today we have different fundraising ideas and approaches. The history of fundraising trace back to the 1700s; first appearing in war bonds needed for funding war effort by collecting money from a large group of people. A more recent history in the 1900s when authors would only write books if they have enough subscribers willing to buy the book after it's release. But today when we say crowdfunding or fundraising we almost exclusively mean funding a project or an idea that happens through the internet. The first noteworthy instance of internet-based fundraising done through the internet happened in 1997 when fans pledged to fund an entire U.S. tour for the band Marillion, raising US$60,000. Many campaigns were arranged independently by artists or their fans, and it's a fact that the main reason we have crowdfunding in its current form was because of the efforts of those early birds. Eventually, the internet finally created Crowdfunding platforms. And naturally the first of which was ArtistShare, A crowdfunding community exclusively funding the artistic efforts of fringe and mainstream artists alike. And in about a decade from the creation of ArtistShare, the current model of internet-based fundraising was born. Subsequently, giving birth to many more platforms created for the sole purpose of fundraising cash for different causes.

Crowdfunding today

Inspecting the current model of crowdfunding we find that it consists of three main entities, the project creators or benefactors, the donors, and the platform. And while the donors can almost be hassle-free since their role is simple and without responsibilities, they simply donate money to a worthy cause or back a new product idea. Most of the problems the world of crowdfunding faces are related to the last two entities; the benefactors and the platform. While benefactors can be scammers or tend to exaggerate and lie about their projects, products and personal causes, most platforms nowadays provide some sort of protection for the donors from those troubles.

But what about the platforms themselves? While there are some extreme cases of abuse by those platforms like what happened with PledgeMusic withholding donations from artists. The most serious concerns are the corruption and high fees some of those platforms take, noting that a lot of those websites specialize solely in personal funding and personal causes, like cancer treatment or finding a home for homeless people, nevertheless, those platforms only take fees from those projects while not taking any fees from charities which are mostly owned and run by people who have money. Some fundraising pioneers like Kickstarter, for example, can hold money raised for up to 14 days with a not-so-transparent for approving projects. All of this and more led the community to the next obvious choice; cryptocurrencies.

Crowdfunding through Cryptocurrencies

Crowdfunding a project through the use the cryptocurrencies, like Bitcoin and Etherum, is collectively known as ICO, even though some other forms of crypto-fundraising exists; the most prevalent and most famous of which is ICO. Even though developers generally advertise ICOs as a way to participate in a new project or gain virtual shares in it like in the STO model of fundraising, yet it all boils down to the same old concept of crowdfunding; which is funding a new project or an idea through the contributions of many people. The first project to run an ICO was Mastercoin in 2014 raising about 3700 BTC (30 mil USD in today's price, about 2.5 mil USD in 2014). And when the famous 2017 bitcoin Bullrun started crypto-ICOs gained well-deserved popularity. To the point that the best 20 performing ICOs were able to collect about 6 billion USD from investors. Yet, unfortunately, this didn't mean the end of the problem or a solution to it.

Problems with the current model of crowdfunding

With traditional fundraising websites like Gofundme, Indiegogo, Kickstarter and Facebook abusing power and collecting hefty fees, take the case of Facebook, for example, it continued its predatory practices jumping into all kinds of markets backed by their billions of subscribers, to the point that they're taking fees for charity. And on the other hand, independent forms of fundraising like ICOs and STOs proved to be full of scams and corruption, which led to the loss of millions of dollars possibly billions, thus the world needed a new platform for fundraising where benefactors can control the process and the money without giving too much control to the platform.

Proposed improvements to this model

And here comes the genius of the mintMe model, the dilemma was creating a platform where benefactors control their money flow without relying on the platform in a quasi-trustless manner, while at the same time ensuring the most amount of safety we can provide our donors. This is why the personal token model is best to solve this dilemma, on one hand as soon as a team or a project releases its tokens for sale, they own the whole amount and any funds received are deposited directly into their wallet. And, on the second hand, chances of scamming is greatly reduced in an open market where the token's price is depending on the actions and milestones of the project, by removing the need for projects to seek out exchanges, while at the same time, exercising fewer restrictions than IEOs we at tried to hold the stick from the middle. Giving benefactors full control of the funds, while at the same time leaving the market to reward or punish their approaches, giving them a motive to improve and less reason to scam. The journey is still long to reach the perfect solution but at we believe we found the perfect balance for the current situation.