One of the main benefits of blockchain technology is that it allows for microtransactions. I can send you money without having to rely on institutions like banks or payment processors. Trust comes from the consensus of the blockchain which makes transactions secure and, at least in theory, cheap.
Just like two parties can trust each other when transferring money over the blockchain, two parties can agree on a smart contract. These contracts can be thought of as computer programmed conditions that, once executed, are immutable because they are stored on the blockchain. Remember: In most blockchain protocols, every node in the network stores a full copy of all made transactions. This makes it impossible for someone to tamper with the smart contract.
Let’s assume we would like to set up a very simple contract. I wish to open a pizza restaurant and need money to get it started. I set up a smart contract with the following terms:
For every 0.01 ETH contributed to my startup capital you get two free pizzas during the first six months of my business. You decide to go for it and send 0,02 ETH to my address. This executes the smart contract which from now on is immutable. Once I open my restaurant you can come by and get your free pizzas.
Crowdholding is building a platform where businesses can do just that. People get to invest in startups by contributing to it with cryptocurrency. But there’s more to it.
Crowdholding aims to connect businesses with the power of the crowd. According to its (very good) whitepaper, 90% of startups fail due to entirely avoidable problems. The main reason is that startups have difficulties assessing the true needs of their target group while being short on investment. Crowdholding wants to combine both the knowledge and funds of the crowd to help businesses achieve more and give the crowd the opportunity to make a profit on successful business ideas. As stated in their whitepaper, “the key to successful online fundraising isn’t asking for money. It’s not aiming for the wealthy 1%. But instead, it’s about building and engaging a community of followers in advance.”
Crowdholding is not only about collecting funds but to use the knowledge of the crowd to improve a product or service before it hits the market. A simple example would be a startup that asks people for feedback on its latest product design. On return, all people who give their opinion, receive a bounty. In Crowdholding, this will be the platforms’ own token called YUPIE.
The main currency on Crowdholding will be YUPIE. In the current ICO, one YUPIE is worth 1/1000 ETH. After the ICO has finished, people will be able to buy YUPIE from exchanges. On Crowdholding the YUPIE tokens can be used in multiple ways. Businesses may use them to reward the crowd for solving tasks like giving feedback on products or making design proposals. The users, on the other hand, may use YUPIE tokens to invest in businesses. In return, businesses will pay a dividend or give away products (like in the example with the pizza restaurant). That way users can both earn YUPIE on Crowdholding by accomplishing tasks for startups and spend YUPIE tokens to invest and grow their funds. They may, of course, also just buy some off an exchange. Crowdholding’s value proposition is the following:
In some cases, a business looking for investment will be a token-backed business that runs its ICO on the platform. Just like in ICO-investing, the investors will be rewarded with the businesses’ own tokens. This, of course, is similar to a normal ICO held “in the wild”. The point here is that Crowdholding makes ICO-investing easy for people who don’t know about blockchain. They aim to create a platform with an active community where you will be able to browse different projects, check out other peoples’ feedback, discuss with supporters and the team, bookmark companies and so forth. A first version of the platform is already up and running and I think it’s looking very promising.
So essentially Crowdholding is a decentralized platform for crowd-investing where businesses can leverage the power of the crowd while people can find and invest in promising projects. The ICO is currently open.
Disclosure: This is not an advertisement for the company’s ICO. I am not taking part in any bounty program. Also, this is no investment advice. Information might be inaccurate or miss out on certain parts. Do your own additional research if you’re interested in investing.