Hello,
Can refunds using bitcoin escrows solve the in the crowdfunding space? That’s the question I really would like to have answered with the help of the communities input. I really would like to hear your thoughts so that I can make active improvements to the paper I am writing.
George Akerlof in his seminal paper once wrote:
“The cost of dishonesty, therefore, lies not only in the amount by which the purchaser is cheated; the cost also must include the loss incurred from driving legitimate business out of existence.”
Crowdfunding although still a very popular way to fundraise support for ideas, products and causes has suffered from a growing trend of disappointing failures. Have you ever wondered if the following might be true:
1. Legitimate business is being driven out of the crowdfunding marketplace because the average consumer cannot determine whether or not a project will be successful or will fail.
2. The past negative experiences of crowdfunding backers are leading to a situation where the market mechanics of fundraising will one day break down amidst the loss of trust between project backers and project creators.
I would be really interested to hear your thoughts in the comments below as to how failures in crowdfunding affect successful well intentioned project creators. **Do you believe that what Akerlof described as the law of lemons is driving down the pledge amounts of legitimate crowdsales such that they cannot sufficiently fundraise to cover the costs of production?**
Take a project like the coolest cooler.
1. Was this failure just incompetence on their part (it was a lemon) or was the project really a peach that simply couldn’t appeal to consumers to pay the price of a peach because consumers had no way of discerning that coolest was actually a peach?
2. Are consumers simply averaging the prices of lemons and peaches in the crowdfunding marketplace making it harder and harder for project creators to set reasonable pledge levels?
3. How much does information asymmetry affect the prices we currently see on Kickstarter and other platforms?
**I really want to hear all of your comments below.** And as always if you find this discussion engaging, interesting, worthwhile please upvote. In addition if you can read and comment on the paper please do so, link provided below. Lets get some interesting discussion about some of these issues going.
Any really helpful or useful comments that become material for improving the paper will be included in publication and your contribution will be recognized.
Published at Sun, 26 Feb 2017 04:05:25 +0000
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