For more than a decade, Kickstarter PBC has persuaded the public to pay people to follow their ideas to build a device, make a movie, or create a work of art. In some ways, it was a harbinger of today’s digital economy built around cryptocurrencies, decentralized organizations, and NFT art.
On Wednesday, Kickstarter plans to present a project that will merge the two worlds. He is gestating an independent company to build a crowdfunding system very similar to Kickstarter but based on blockchain technology. When it’s ready, Kickstarter will switch its own website to the new infrastructure, and the new company will make the tools available to anyone to create a competitive crowdfunding site.
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The new company has no name yet. Development is scheduled to begin in the first quarter of next year, and Kickstarter expects to transition its site to the new protocol sometime in 2022. The change will take place completely behind the scenes and should not affect how the people use the site. The York-based company said.
It is a great technical company. Embarking on the project was a “great decision,” said co-founder Perry Chen, but ultimately it was easy to make because it fits in with Kickstarter’s mission, which is “to help bring creative projects to life.”
Chen started Kickstarter with a couple of art-loving friends in 2009, and it was an almost instant hit with cash-strapped entrepreneurs and eventually celebrities and large companies looking to test consumer demand. The Peloton exercise bike started with a Kickstarter campaign ($ 307,332 raised), as did the Oculus VR headsets ($ 2.4 million). Kickstarter helped fund new albums by Amanda Palmer ($ 1.2 million) and pop group TLC ($ 430,000) and revived cult classic TV shows like Mystery Science Theater 3000 ($ 5.8 million) and Veronica Mars ($ 5.7 million).
There were also a ton of projects that consumed your cash and were never delivered. Crowdfunding has largely faded from public consciousness in recent years, and Kickstarter pointed out to its venture capitalists that it was not the kind of hyper-growth startup they thought it was. (Kickstarter changed its designation in 2015 to a public benefit corporation, and the following year took the unusual step of paying a dividend to the startup’s shareholders rather than reinvesting the money in pursuit of an initial public offering.)
Today, money that may have once gone to Kickstarter campaigns flows through blockchains to what is known as Distributed Autonomous Organizations, or DAOs. Last month, a group called ConstitutionDAO mounted a crowdfunding campaign to purchase a rare copy of the United States Constitution. It raised $ 46.3 million from thousands of taxpayers, but was unable to win the auction. The DAO offered refunds and was dissolved.
The adoption of cryptocurrencies could help Kickstarter regain some relevance. A number of startups, as well as companies over a century old, are looking for ways to decentralize their digital infrastructure, often in an attempt to cut costs. Twitter Inc. has been working on an open source decentralized social media system called Bluesky since at least 2019.
Kickstarter’s open source protocol will be built on the Celo blockchain platform, which counts Andreessen Horowitz and Jack Dorsey among its backers. Celo says its network is carbon negative, in part through the purchase of carbon offsets. (A common criticism of crypto architecture is how energy intensive it can be.)
There is still a lot to be solved in the Kickstarter project. You have yet to appoint a leader for the new company. Kickstarter also plans to create what it calls a governance lab, separate from the existing and new company, to provide independent governance for the protocol. The designation of a different entity is intended to prevent Kickstarter from having outsized influence in what is supposed to be a largely decentralized effort.
© 2021 Bloomberg