When businesses are looking for rapid growth, a secure, efficient, and scalable solution to funding is necessary. A good solution is building capital with digital, asset-backed tokens, a means of crowdfunding that is open to all companies, with great levels of security and without the restraints of bank loans, and the expectations of private investment.
What is asset-backed token crowdfunding?
Asset-backed tokens are a form of digital investment. Unlike other digital investments on the market, tokens are more secure because they are asset-backed, meaning that they are linked to real underlying assets that allow for automatic and fair market coordination. The U.S. Securities and Exchange Commission (SEC), defines crowdfunding as “a financing method in which money is raised through soliciting relatively small individual investments or contributions from a large number of people.”
The DigiFunds asset-backed fundraising platform is intended to empower businesses with sustainable and extensive capital funds needed to rapidly scale and grow. It is a secure model that provides businesses with the Initial Coin Offering (ICO) they need to take their venture to the next level.
Wondering what the pros and cons are of digital, asset-backed crowdfunding? Let us run through them.
Pros
- Turbocharged transparency. Asset-backed tokens provide a unique opportunity for investors from all backgrounds, regardless of their experience with digital assets, thus democratizing investment funding. Unlike traditional capital fundraising, which comes with associated costs and funding ceilings that can disadvantage projects, DigiFunds creates a platform where investment decisions are made by people. If an idea gains traction and people like it, they will support it, and things will get built faster.
- Reduces barriers to entry. With asset-backed tokens, individuals from any walk of life — from seasoned investors to newcomers to digital assets — can invest in a promising venture with tangible currency, convert it into digital tokens, and invest in the business of their choice. This democratizes investing, making it available to all.
- A more efficient, decentralized structure. Because every transaction is recorded and verified, it is much harder for bad actors to manipulate or falsify records for fraud or other nefarious activities. The network verification system inherent in blockchain technology is known as proof of work (PoW). PoW enables the creation of decentralized marketplaces, allowing individuals and entities to trade directly without intermediaries. This eliminates the need for a centralized authority, such as a bank, financial institution, or government regulatory agency, which can often create barriers to entry and restrict access to financial markets.
- Introduces fractionalization. This means ownership is split into digital tokens means buyers can buy a small portion, shrinking costs and barriers to entry. Because it is a shared platform, anyone interested can invest. This results in a much greater fundraising potential because the number of potential investors is unlimited. While a shared investment model creates more workable funds, which means more moveable capital for investors to channel into growth.
- Strengthened security. Blockchain and Web3 technology keep assets secure.DigiFunds is built on Web3 technology to create a more secure investment platform. This ensures a greater openness in investment through shared ownership, enhanced security measures, and decentralization. We apply blockchain technology and advanced encryption to provide greater security for your files, documents, and information, protecting investors, companies, and the wider economy.
Cons
- Limited protections. Because it is not regulated in many parts of the world, digital asset crowdfunding has the potential to leave investors vulnerable to fraud, scams, and other similar risks. Protections for investors are also not as clear-cut as other types of investing. However, DigiFunds is currently in the process of securing US government approval in order to protect both investors and fundraisers. Additionally, by utilizing blockchain and Web3 technology, DigiFunds promises a higher level of security than traditional types of investing.
- Stability. Like most types of financial assets, digital assets issued via crowdfunding have the potential to be volatile and subject to rapid market fluctuations, depending on conditions or changes in investor sentiment. However, DigiFunds prioritizes efficiency, transparency, and security, so investors and fundraisers understand what they’re getting into.
- Limited adoption. In reality, this new tech is yet to be adopted widely, and so applicability to a broad range of investment opportunities is yet to be seen. However, with popularity building at a rapid pace, and platforms like DigiFunds emerging and building the community, this will change soon enough.
Putting efficiency, transparency, and security first, investors and fundraisers are empowered by blockchain technology that provides a more secure alternative to traditional investment opportunities. Via DigiFunds, companies of any size and from any industry can access the capital they need to be successful, while investors get access to a broad pool of the most exciting new startups.
Find out more about the DigiFunds platform here and get started today.