While initial coin offers have eased people’s path to raising capital for blockchain projects, crowdfunding had been around for years prior to the rise of token sales. The ICO mania of 2018, which enabled many conmen to siphon investor’s capital for personal motifs, has given token sales a bad reputation. However, traditional crowdfunding means don’t have a particularly clean slate either.
In fact, Kickstart, one of the largest crowdfunding platforms in the world, has been the starting point for multi-million dollar scams that have been merely termed as failures. Only a handful of projects launched on Kickstarter actually materialize into a product; many, including projects that raise millions of dollars, never lead to a real product.
The Biggest Crowdfunding Scams
The myriad variety of products can be pitched on Kickstarter. People have turned to the platform to crowdfund everything from augmented reality gadgets to nifty water coolers. Some of these novel products managed to attract so much interest that they raised fortunes; yet, the campaigns turned out to be mere scams.
Skarp Laser Razor
This razor’s team promised to disrupt the shaving industry by delivering the most advanced razor to date, one that could offer the most effective hair trims. Through a sham prototype video, the project leveraged Kickstarter to raise over $4 million. By the time people began noticing caveats in the product’s pitch, it was too late.
To date, the project has not materialized into a functioning product.
Crystal Wash 2.0
Laundry products are one of the most common consumables in the world. In an effort to capitalize on people’s desire to seek some novelty in one of the most mundane tasks ever, Crystal Wash’s promised the delivery of a laundry ball that would last over 1,000 loads, wash better than traditional detergent, and offer a means to track the quality of the wash.
The project managed to raise hundreds of thousands of dollars but once people received the product, they reported that the laundry balls offered no means to track wash quality and provided no added benefit beyond washing with normal water.
Tiko
While 3D printers still draw in quite a bit of interest, the hype was even in stronger in 2015. A team decided to take advantage of consumers’ interest in 3D printing and launched the Tiko project.
Tiko was supposed to deliver a small but powerful 3D printer that could be used by the masses. The project grew incredible popular and drew in over $3 million. However, two years after the fundraise, Tiko’s founders announced that they were unable to deliver on their promise and exited with a mere apology.
The list of Kickstarter projects that have turned out to be nothing in quite large but the above examples stand out due to the large sums of capital they raised. Many projects, on the other hand, raised huge sums but managed to only deliver a fraction of their promise. An outstanding example in this list will be the Coolest Cooler, which managed to raise over $13 million but many of the project’s backers have tet to receive their product.
Crowdfunding needs Vertical Improvement
Blockchain technology has been used to further ease the launch of crowdfunding campaigns via ICOs. However, the transparency and voting rights this technology can provide can enable crowdfunding to become both secure and easy. A project called PledgeCamp has launched a new crowdfunding platform where stakes from project launchers and milestones set by project backers ensure scams are thwarted.
On PledgeCamp, project backers can match a founder’s stake with their first milestone. If a project founder is able to provide proof of basic work, the first milestone, which is equal to the stake, will be released. As additional work is provided, the project backers will vote to release additional funds in proportion to the amount of work that is completed.
While a milestone-based system accompanied with the transparency aspects of blockchain technology can deliver vertical improvement to crowdfunding, the history of crowdfunding has a long list of scams. In a later piece, I’ll cover the massive sums that were scammed on Indiegogo, a crowdfunding platform that has much looser terms compared to Kickstarter.
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thanks hatu
Luandry, shavers and wash machine. In the first place it already a red. How can they innovate those products if they doesn't have an existing one.
As I stated, the projects provided fake prototypes.
Dear @hatu
Definitely this world of cryptos lends itself to many scams, the detail is that people like me, as we can know when it is a scam, for us it is difficult to know ..
I hope for your next publication to know how much that amount of scams goes up
Plenty of people fall prey to scams and hence the need for tools that mitigate risk.
Greetings @hatu
Interesting publication
The idea of being able to create a product with novelties and attract investments through investment tools is fascinating. The serious issue is to be able to satisfy the technical and financial needs of the investors. Based on the above, the study of the market as the product must be well done, take into consideration the provision, the social and environmental impact, as well as the process of return of capital.
In typical crowdfunding, there really isn't a return on capital since people are "rewarded" products rather than tokens.
Where their are many new projects coming up daily, surely scam projects also can't be avoided. Where their are many ICO also out there, scams ICO can't be denied. The best is just to try and avoid the scam ones
Measures can be taken to thwart the scams.
There are lots of new scam by the name of ico airdrops etc people are wasting there time and money also in markets lots of fake companies they robbing money from people by the name off crypto amd blockchain technology
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An airdrop is typically a free give-away of tokens. How can something free be a scam?
We can never find a risk study that will reach 0% but when the needs of a technology increases, we will be forced to look for solutions that will mitigate scam.
Crypto projects are better in a whole from the starting point. From the start of the project you get to know what it would be and if it would be accepted by trading platforms
Kickstarter is where "shitcoins" existed before blockchain.
@hatu, Sure, Tokenised Ecosystem earned bad reputation due to many scams and recently some hacks and scams shaked this Ecosystem.
Here most important point is, we have to go through from all the Pros and Cons of particular Ecosystem then it will be very easy to understand which steps to take to avoid any unforseen events. Spreading education and self-education is vital part to hold strong vision.
And just want to know brother, are you facing any issue with CBNT while login because i am not able to access it from both my Laptop and Android Phone. It's showing as Network Error continously and i am facing this issue from two days.
Have a blessful time ahead.
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Congratulations @hatu!
Your post was mentioned in the Steem Hit Parade in the following category:
Sadly, many scam projects trick investors and take their money. It used to be ICO and today we see a lot of IEO as a pattern. but I saw the project veil stand out amazingly even without running ICO or anything.
First time I hear about Kickstart.
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I signed up for a Lantern on indiegogo in 2015 I think it was... still waiting for it to arrive...
https://www.indiegogo.com/projects/lantern-a-global-satellite-data-radio#/
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