Bitcoin For Dummies
Rather than relying on one investor, or one major source of funding, a crowdfunding campaign allows you to decentralize the funding process by acquiring backers and supporters to provide money up front. By accepting bitcoin as a payment method for your campaign, you can decentralize things even further and reach a global audience.
Bitcoin provides businesses and individuals with a powerful tool to raise funds for an upcoming or existing project. Considering the fact that bitcoin is not taxable in most countries, many people view it as a safe haven for “tax‐free” funding.
When you convert the raised funds to fiat currency, you may be taxed on them, depending on the amount you receive.
When crowdfunding, never list a fake project or claim to do some- thing with the money you never intend to fulfill. Even though bitcoin is a non‐reversible payment method, people will hunt you down if you try to run off with their money.
Luckily for bitcoin enthusiasts, most crowdfunding projects so far have been legitimate, and most have delivered on their promises as well. Depending on what type of project you list, it may take additional time to reach your goals, especially if it involves block- chain technology development.
But not every project is using crowdfunding platforms for the right reasons. Some people view crowdfunding as a way to get some funds quickly, without ever having to pay it back. Even though most platforms implement security against misuse, there is always a minor chance of a project not delivering on the promises made. But that has nothing to do with bitcoin per se — it can happen with any type of crowdfunding campaign. Simply look at how many people backed projects in Kickstarter and never received the item for which they pledged a certain amount. Check out www.kickstarter.com/help/stats for more.
Whenever you help crowdfund a bitcoin project, always determine whether you are entitled to some form of reward. Crowdfunding is not the same as buying a share of a company or product at a cheaper rate. It simply means you’re willing to spend money in order to make someone’s dream come true, which may or may not include a reward. However, you should not partake in a crowd- funding campaign just for the reward. That’s not why this system was invented in the first place.
Source: Bitcoin For Dummies