Crowdfunding Using Blockchain

Abstract

Crowdfunding is a method of raising funds for innovative projects by collecting small amounts of money from a large number of people, typically through an online platform. However, crowdfunding platforms have certain issues that need to be addressed, such as the lack of investor guarantees and control over contributions. To tackle these problems, this paper proposes the use of blockchain technology to create a decentralized, secure, and private crowdfunding platform. The platform will employ smart contracts to create interactive forms for campaign creation, donation, and approval, enabling both project creators and investors to efficiently raise and manage funds. Additionally, all transactions made on the platform will be recorded on the blockchain, which will provide transparency in the fundraising process and allow donors to track their contributions

Introduction

The integration of blockchain technology with crowdfunding platforms is revolutionizing fundraising by addressing many of the challenges associated with traditional methods—such as fraud, lack of transparency, and dependency on intermediaries. Crowdfunding allows individuals to fund projects directly, but it often suffers from inefficiencies and risks. Blockchain, with its decentralized, transparent, and secure nature, offers an effective solution to these problems.

Smart contracts, a key feature of blockchain, are self-executing codes that automate agreements between parties. These contracts enforce rules transparently, ensuring funds are only released when conditions are met, reducing delays and improving trust.

Key Components:

• Crowdfunding Basics: A model where a diverse group contributes financially to support a specific project, bypassing traditional financial institutions.

• Role of Blockchain: Acts as a secure, immutable ledger. Smart contracts manage the process, from campaign creation to fund distribution, without requiring intermediaries.

• Advantages of Blockchain in Crowdfunding:

  • Decentralization and transparency

  • Secure peer-to-peer (P2P) interactions

  • Fraud prevention

  • Automated fund management using smart contracts

Proposed Fundraising System:

• Process Flow:

  1. Campaign Creation: Manager sets campaign parameters.

  2. Contribution: Donors contribute securely via MetaMask.

  3. Request Approval: Contributors vote on spending requests.

  4. Fund Allocation: Approved funds are automatically transferred.

Technical Implementation:

• System Architecture:

  • Built on Ethereum using Solidity for smart contracts and React/Tailwind CSS for the frontend.

  • MetaMask handles user authentication and ETH transactions.

  • Smart contracts ensure legal and transparent transaction handling.

• Transaction Lifecycle:

  • Transactions are created, broadcast, validated by nodes, and added to blocks via mining, becoming part of Ethereum’s public ledger.

Platform Features:

• Dashboard: Shows user campaigns, profile, and contribution options.

• Create Campaign: Users input project details and fundraising goals.

• Campaign Overview: Displays campaign stats, including backers and funds.

• Donation Process: Secure ETH contributions via MetaMask.

Conclusion

The integration of blockchain technology into crowdfunding presents a transformative and innovative approach to fundraising. Our application is designed with user accessibility in mind, ensuring even individuals unfamiliar with blockchain can navigate the crowdfunding process seamlessly. As blockchain and ICOs continue to evolve, our application stands poised for significant advancements, offering a bright future with ample opportunities for refinement and expansion. Drawing insights from the solidity code implementation, we successfully compiled and deployed smart contracts on the Ethereum blockchain using MetaMask, marking a milestone in decentralized crowdfunding. The creation of a decentralized web app further streamlines user interactions, enabling project creation, contributions, request initiation, approval, and finalization through an intuitive frontend. However, it is important to note that the current stage of blockchain-based crowdfunding is exploratory, requiring continued exploration of legal and technical considerations. Looking ahead, the proposed research demonstrates promise in addressing these challenges and advancing the crowdfunding landscape. The application\'s potential for easier and more secure realization of ideas aligns with the evolving nature of blockchain technology. The future holds opportunities for our crowdfunding platform to contribute to the broader adoption of Ethereum-based DApps, fostering a community where creative projects find support through decentralized and transparent fundraising mechanisms.

References

[1] JOURNALS, GRD. “Crowd Funding Using Blockchain.” GRD Journals, 2019. [2] N. Yadav and S. V., \"Venturing Crowdfunding using Smart Contracts in Blockchain,\" 2020 Third International Conference on Smart Systems and Inventive Technology (ICSSIT), Tirunelveli, India, 2020, pp. 192-197, doi: 10.1109/ICSSIT48917.2020.9214295. [3] Shuai Wang, Liwei Ouyang, Yong Yuan, “Blockchain-Enabled Smart Contracts: Architecture, Applications, and Future Trends”, IEEE Trans. on Sys. Man and Cybernetics, Feb 2019, 2168-2232. [4] Yong Yuan, Fei-Yue Wang, “Blockchain and Cryptocurrencies: Model, Techniques, and Applications”, IEEE Trans. on Sys. Man and Cybernetics, Sep 2018, 2168-2232.

Copyright

Copyright © 2025 Tanmay Zade, Kuldeep Wakode, Ayush Panchakshari, Shantanu Barad, Prof. Shruti Taley. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.