Crypto Model for Crowdfunding
Contextual Citation
"Bitcoin is more than money, and more than a protocol. It’s a model and platform for true crowdfunding – open, distributed, and liquid all the way."
- Naval Ravikant [1]
Discussion
Naval Ravikant:
"Bitcoin is not just a protocol or money, it’s a new business model for Open Source Software. Prior to Bitcoin, you had to raise money, write software, distribute your product, build a business model, and work towards liquidity. Angels, VCs, salespeople and bankers guided you the entire way, through a maze of tolls and controls.
The Bitcoin model for crowdfunding dispenses with everything except the software:
- Write software to power a completely distributed network in which any node can participate anonymously.
- Allocate scarce resources in the network using a scarce token – an “Appcoin”. Users need this Appcoin to use the network. Owners of scarce resources get paid in Appcoins.
- Pre-mine or early-mine Appcoins and keep some non-threatening amount. These are shares of your company, equity that will appreciate in value if the network is adopted.
- Give network operators the ability to collect new Appcoins in proportion to their contribution. Route a small fraction of each transaction output to the developer foundation (Mastercoin does this). These revenues are used to pay for operations, and bounties for ongoing development.
- As network usage increases, so does equity value and revenue.
- Anyone can buy Appcoins, anywhere, anytime, anonymously. Ship your code, ring the IPO bell.
This is true crowdfunding – get funded by your users in proportion to their usage. Reward early adopters, network operators, and developers with upside.
In economics, the artificially scarce token used to allocate scarce resources is called “money.” So Bitcoin is crowdfunded OSS to run an Economic network. Now, a new generation of Appcoins can be created as open source software, crowdfunded into existence, and go public on day one. They can run networks where Bitcoin may not work, or where separate funding and compensation is needed." (https://startupboy.com/2014/03/09/the-bitcoin-model-for-crowdfunding/)