9482 Project
9482 Project
9482 Project
ARTICLEINFO ABSTRACT
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Prof. Sonali Dongare et al Int J Sci Res Sci Eng Technol, November-December-2023, 10 (6) : 223-228
Ethereum's smart contracts in reshaping the the emphasis remains on establishing a foundation for
crowdfunding paradigm. blockchain-based crowdfunding networks that
prioritize privacy, security, and decentralization.
A. Evolution of Crowdfunding
The widespread adoption of crowdfunding as a quick II. LITERATURE REVIEW
and efficient fundraising method has become
particularly pronounced amid the Covid pandemic. A. Crowdfunding Landscape and Traditional
Platforms like Kickstarter.com, Indiegogo.com, and Challenges
Mystartr.com exemplify the diverse range of The crowdfunding landscape has undergone
campaigns, from individual medical assistance to large- significant transformations, especially amplified
scale funds. The speed and efficiency of crowdfunding during the Covid-19 era. Platforms like
in mobilizing funds swiftly set the stage for exploring Kickstarter.com and Indiegogo.com have been
novel approaches. instrumental in enabling campaigns ranging from
individual assistance to large- scale initiatives.
B. BLOCKCHAIN’S DECENTRALIZED SOLUTION However, inherent vulnerabilities, such as data
Blockchain, with its decentralized and immutable breaches, high fees, and fraud, persist due to the
database, offers a promising solution to the challenges anonymity of user identities, prompting the
faced by traditional crowdfunding platforms. By exploration of novel solutions.
leveraging the unique features of blockchain, such as
immutability and distribution, the vulnerabilities B. Blockchain as a Game-Changer:
associated with centralized control can be mitigated. Blockchain technology emerges as a disruptive force in
The distributed ledger of blockchain not only ensures addressing the shortcomings of traditional
transparency but also introduces a layer of security crowdfunding. With its decentralized and immutable
crucial for the sensitive nature of financial transactions. characteristics, blockchain ensures transparency and
C. Smart Contracts and Ethereum reduces fraud risk. The versatility of the blockchain
A focal point of this paradigm shift is the integration of ledger and the application of smart contracts, notably
Ethereum smart contracts, created using the Solidity in languages like Solidity and Vyper on platforms like
language. These digital contracts, executing Ethereum, redefine the possibilities for secure and
automatically when predefined conditions are met, automated transactions.
facilitate secure and trustful transactions without the
need for a central authority. MetaMask, a C. In-Depth Exploration of Blockchain Crowdfunding
cryptocurrency wallet, acts as a bridge, enabling secure Platforms
interactions with decentralized applications on the The literature navigates through diverse blockchain-
Ethereum network.. based crowdfunding platforms, each offering unique
features. Notable examples include LikeStarter, a
The objective of this review is to comprehensively decentralized autonomous organization (DAO) on
examine the landscape of blockchain-based Ethereum, showcasing the potential of sharing and
crowdfunding. By synthesizing insights from research supporting content through custom ERC-20 tokens.
papers, we delve into the strengths and limitations of Modular crowdfunding platforms utilizing Ethereum
existing platforms, analyze user perceptions, and and Solidity present secure and transparent
evaluate the impact of blockchain on reshaping the transactions, albeit with potential challenges in user
crowdfunding ecosystem. Throughout this exploration, comprehension.
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Prof. Sonali Dongare et al Int J Sci Res Sci Eng Technol, November-December-2023, 10 (6) : 223-228
D. Innovative Models and Potential Challenges: Termed as "peer-to-peer" lending, this crowdfunding
Beyond the conventional crowdfunding paradigm, the variant involves contributors who anticipate the
literature delves into innovative economic models. repayment of their investment with interest.
WHIRL's pay-it-forward approach, creating a positive Remarkably, it circumvents conventional banking
feedback loop of generosity, and cryptocurrency channels, fostering a direct connection between
investment platforms like BitFund introduce unique investors and entrepreneurs.
dynamics. However, challenges such as the
accumulation of Karma points and the intricacies of B. Equity-Based Crowdfunding:
cryptocurrency dynamics highlight areas for further Within this framework, investors acquire partial
investigation. ownership of the business project, entitling them to
dividends. This model introduces an element of risk,
E. Security Enhancement and Digital Identity akin to a financial gamble, as the success of the project
Management: dictates the fluctuation of share values.
Recognizing the vulnerabilities of traditional
crowdfunding, the literature proposes robust solutions. C. Donation-Based Crowdfunding:
Integration of digital identity management with Focused on the principle of altruism, investors in
blockchain not only enhances security but also offers a donation-based crowdfunding do not seek financial
cost-effective alternative to traditional Know Your returns. Typically associated with cause-oriented
Customer (KYC) systems. This approach fortifies projects, such as charities and disaster relief efforts,
crowdfunding ecosystems against centralized contributors invest based on their belief in the project's
architecture attacks, paving the way for more secure mission. While financial returns are absent,
and transparent transactions. expressions of gratitude in the form of perks are often
extended to donors.
F. Critical Evaluation and Research Gaps:
While current research showcases the potential of IV. PROPOSED METHOD
blockchain-based crowdfunding, critical evaluations
pinpoint challenges. Issues such as user understanding, A. Smart Contract Integration
technical complexities, and scalability emerge as focal The foundation of the proposed blockchain-based
points requiring further exploration. The literature crowdfunding network lies in the integration of smart
emphasizes the significance of ongoing research to contracts using the Solidity language on the Ethereum
refine existing models and address emerging blockchain. Smart contracts, as demonstrated in
challenges in this evolving landscape. various platforms like LikeStarter [1], serve as digital,
automated agreements that execute predefined actions
III. TYPES OF CROWDFUNDING when specific conditions are met. This ensures secure
and trustworthy transactions, eliminating the need for
The selection of crowdfunding models is often a central authority and enhancing transparency in the
contingent on the nature of the venture and its crowdfunding process.
overarching goals. Three fundamental types B. Decentralized Application (DApp) Utilization:
characterize the crowdfunding landscape, each Unlike traditional web-based applications, the
tailored to specific business structures and objectives: proposed system leverages a decentralized application
A. Debt-Based Crowdfunding (DApp) model based on the Ethereum blockchain. In
this paradigm, all campaign-related information,
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Prof. Sonali Dongare et al Int J Sci Res Sci Eng Technol, November-December-2023, 10 (6) : 223-228
contributions, withdrawal requests, and funds are D. Reduced Intermediaries and Costs:
stored on an open blockchain network accessible to all Blockchain minimizes or eliminates the need for
participants. This implementation embraces the intermediaries like banks, reducing transaction fees
concept of distributed ledger technology, fostering and administrative costs. Smart contracts automate
transparency and enabling every network participant fund distribution, streamlining the process and
to access and validate the information recorded on the lowering overhead expenses.
blockchain.
E. Immutability:
C. Immutable Ledger and Enhanced Security: The distributed and immutable nature of blockchain
Ensuring an immutable ledger is a cornerstone of the ensures that recorded transactions cannot be easily
proposed methodology. Drawing insights from altered. This feature enhances the trustworthiness of
platforms like LikeStarter, once a transaction is crowdfunding activities and provides resistance against
recorded on the blockchain, it becomes resistant to fraud.
tampering. The decentralized storage of blockchain
databases on every network node adds an extra layer of VI. CHALLENGES AND DISADVANTAGES OF
security, mitigating the risks associated with data CROWDFUNDING
breaches and unauthorized access.
A. Complexity and Technical Knowledge:
V. ADVANTAGES OF BLOCKCHAIN-BASED Challenge: Blockchain technology, which underlies
CROWDFUNDING many crowdfunding platforms, is still relatively
complex and requires specialized technical knowledge
A. Transparency and Trust: for development and maintenance.
Blockchain ensures a transparent and immutable Disadvantage: This complexity can create barriers for
ledger of transactions, fostering trust among non-technical users or project creators who may
participants. Smart contracts automate crowdfunding struggle to navigate the platform effectively.
agreements, reducing the need for intermediaries and
enhancing transparency. B. Volatility and Risk:
Challenge: Cryptocurrencies, often used for
B. Security: transactions in blockchain-based crowdfunding, can
Advanced cryptographic techniques in blockchain be subject to significant price volatility.
enhance the security of transactions, making the Disadvantage: This introduces risk for both project
crowdfunding process highly resistant to fraud, creators and backers, as the value of funds raised or
tampering, or unauthorized access. Funds stored in pledged can fluctuate, affecting the project's financial
blockchain-based wallets are secure, reducing the risk viability.
of theft.
C. Storage Challenges:
C. Global Accessibility: Challenge: Blockchain databases are stored on every
Blockchain facilitates global participation in node of the network, leading to potential storage
crowdfunding campaigns, eliminating geographical problems as the volume of transactions increases.
restrictions. Anyone with an internet connection and Disadvantage: More storage space is required as the
a cryptocurrency wallet can contribute, promoting platform grows, which could pose challenges for
inclusivity and expanding the pool of potential backers. maintaining and managing the distributed ledger.
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Prof. Sonali Dongare et al Int J Sci Res Sci Eng Technol, November-December-2023, 10 (6) : 223-228
International Journal of Scientific Research in Science, Engineering and Technology | www.ijsrset.com | Vol 10 | Issue 6 227
Prof. Sonali Dongare et al Int J Sci Res Sci Eng Technol, November-December-2023, 10 (6) : 223-228
International Journal of Scientific Research in Science, Engineering and Technology | www.ijsrset.com | Vol 10 | Issue 6 228