Click to Print

This Major Crowdfunding Site Now Accepts Bitcoin Pledges

October 28, 2013
URL: http://www.entrepreneur.com/article/229638

Two hot investment trends have collided: You can now crowdfund your project with Bitcoin.

Australian crowdfunding platform Pozible has begun accepting pledges in Bitcoin, an online-only currency, according to a statement released today.

Pozible says the move is a result of both the rapid increase in popularity of the digital currency and the low cost associated with the transaction. The crowdfunding platform says it has received multiple requests from users looking to accept Bitcoin payments. And the low transaction costs of Bitcoin payments make them particularly advantageous for international transactions, which can otherwise be expensive.

Related: Why Bitcoin's Future Is Bright (Video)

For project creators to be able to accept a Bitcoin pledge, they have to set up a Bitcoin wallet, according to the written statement from Pozible. Pledgers need to do the same. Unlike other forms of payment, pledges made in Bitcoin are immediately dumped into Pozible’s holding account, though they aren't actually converted until the project reaches its goal. If a project fails to meet its goal, bitcoins are returned to the pledger’s Bitcoin wallet.

At the moment when a pledge is made, the Bitcoin is converted into the relevant currency using rates established by the Melbourne-based Bitcoin digital wallet CoinJar. If a project is successful, the Bitcoin payment is processed at the normal Pozible transaction rate of 5 percent service fee plus 0.001 Bitcoin. That’s significantly less than the 2.4 percent plus 30 cents transaction fee that PayPal and most credit cards carry, on top of the 5 percent Pozible service fee.

Pozible launched in 2010 and as of the end of September, projects on the platform had raised a total of AUD $15 million, or approximately $14.4 million, from pledgers in 100 countries. The largest single project so far on Pozible is AUD $243,000, or about $233,000.

Related: Bitcoin Basics: What it Is and How it Works (Motiongraphic)

A more niche web site CoinFunder also accepts Bitcoin crowdfund payments, but for a more major platform like Pozible to accept Bitcoin is an indication of the growing popularity of the online currency.

Bitcoin was initially launched in 2008 but the decentralized currency has been receiving an increasing amount of attention in the last year. Users can either buy bitcoins with other currencies or mine for them in computer code. In addition to being decentralized, Bitcoin is also completely anonymous. Its anonymity is one reason that Bitcoin is so desirable. It also makes it ripe for fraud.

Just last week, the Manhattan U.S. Attorney’s office seized bitcoins from the proprietor of Silk Road, an online portal allowing users to buy drugs. In total, the U.S. Attorney’s office seized 173,991 Bitcoins from the drug portal’s proprietor, Ross William Ulbricht, in connection with the case. At current exchange rates, that’s over $33.6 million, according to a statement from the New York FBI’s office. The bitcoins were seized because the drug-sale online portal was allegedly part of a money laundering operation, according to the statement.

Related: Successful Crowdfunding Is About More Than Money