Research on Crowdfunding:

Online crowdfunding enables people to raise funds for project, charity, or business. People who are

interested in a project, charity, or business can donate by making an online transaction. The donated

money goes to the project manager, which he uses to complete the project, charity or to make a product.

This existing method of online crowdfunding has a major drawback. It does not allow contributors to

have control over the money they have contributed. Since in the existing method the project manager has

all the control over the money contributed, he can very easily perform malicious activities.

Crowdfunding Scams:

Crowdfunding scams are when a crowdfunding campaign asks for and accepts donations through false pretenses,
misleading people about the outcome, nature of the project, or cause being solicited for. Crowdfunding runs through
channels that send money directly to the people asking for it, often on a very large scale through the use of the
internet.

Crowdfunding is the collection of money, often small sums from large groups of people, to help someone in need.
This can be done through social media platforms and specific crowdfunding sites like GoFundMe, Kickstarter, and
Indiegogo. Crowdfunding is done for disaster relief, to help a neighbor or friend in need, for development or
implementation of a project or product, or as aid for people impacted by a pandemic.

A crowdfunding scam is when a bad actor or con artist sets up a fake crowdfunding campaign to defraud people out
of their money. Scammers pretend to be victims and seek to garner empathy and support in the form of monetary
funds.

Crowdfunding scams can also be used to support projects and products that never actually come to fruition.
Scammers regularly have no intention to deliver on their promises.

About 70 percent of those giving to crowdfunding campaigns are actually helping someone in need. The other 30
percent are often putting money directly into the pockets of criminals.

Examples of real-life crowdfunding scams:

Crowdfunding has exploded with the world having increased internet access at their fingertips. Criminals have
found a way to exploit this.
Crowdfunding scams surround nearly every disaster relief effort today, with a prime example being the collapse of
the high-rise condo in Surfside, Florida in June 2021. Several GoFundMe fundraisers were set up on behalf of
supposed victims of this tragedy.

Quickly after they appeared, Florida state officials warned the public that many of them were scams, and 21
campaign pages tied to the tragedy were flagged and taken down. And officials were not sure if some of the
remaining GoFundMe crowdfunding campaigns that were still active were actually valid or not.

The COVID-19 pandemic also spurned many different types of scams. Criminals are looking to take advantage of
people trying to help by soliciting donations to pad their own pockets. The FBI warns that charity scams related to
the pandemic, which can include crowdfunding scams, are on the rise.<

Another example of crowdfunding scams involves asking for money for a product or project that is under
development. These are often cutting-edge technologies that excite potential consumers. The FTC reports on
the iBackPack crowdfunding scam that was supposed to deliver customers a backpack containing built-in batteries
for charging mobile devices. Instead of using the solicited funds for creation of this product, the CEO allegedly took
a large part of the funds for personal profit.

*this information we took from

https://www.okta.com/identity-101/crowdfunding-scams/#:~:text=Crowdfunding%20scams%20are

%20when%20a,or%20cause%20being%20solicited%20for.

Prevent Crowdfunding scams using Blockchain technology:

Blockchain technology ensures us to create secure, trusted, and decentralized system. Crowdfunding is an

online money raising strategy that uses small amounts of capital from a large number of individuals

which finance a new project, charity, business. Crowdfunding makes use of the easy accessibility of vast

networks of people through social media and crowdfunding websites to bring investors and entrepreneurs

together. The main problem with the current system is that they don’t provide the contributors assured

policy and contributors don’t have control over the money they donated. So, by using blockchain we can

provide a safe, secure, and transparent way for crowdfunding.

Here we solve this problem faced by the existing online crowdfunding platforms by using Ethereum

network and smart contract. The development of Blockchain technology has allowed to create

decentralized system. It has proposed new methods to conduct transactions and make agreements. One of

the technologies that propose an alternative to the traditional model is the smart contract. A smart contract

is like a contract in the physical world, but it is digital and represented by computer programs that stored

in a blockchain. These smart contracts can be used to implement logic.

Ethereum is an open-source, public, blockchain based distributed platform and operating to featuring

smart contract. Ether is a cryptocurrency which is generated and used by the Ethereum platform.

Ethereum provides a decentralized operating system which can execute an application on the public

nodes. The contract is written in such a way that all the money will be added to the pool. When the

request meets the specified condition then all the money will be transferred to the manager.

A method has been proposed here that uses smart contract to manage all the
activities performed in a crowdfunding campaign.

There are basically three main Modules:

1. Campaign Creation: To create a campaign, we need to provide target amount, deadline,

minimum contribution. After creating a campaign, the manager needs to create a request with
campaign description, recipient address and the amount of money needed by the manager to
transfer money to the recipient.

2. Request-Approval Module: The campaign manager will create a request for

spending money with proof for the campaign. Then all contributors will be notified that
the manager needs to spend some money. So, the contributors need to approve the request
if they want. A contributor can vote only once to approve a request.
3. Finalize Module: After completing the voting process if the approval count is more than
the specified condition then the money will be transferred to the vendor that the manager wants
to send. The manager should specify the address of vendor correctly to which the money is to be
transferred.