Applying Ethereum Smart Contracts to Blockchain-Based Crowdfunding System to Increase Trust and Information Symmetry

Abstract

∗Crowdfunding is one of the most popular method to collect capital. However, various concerns and obstacles still need to be overcome in order to entirely gain benefit from crowdfunding. The information asymmetry is one of the crowdfunding problems where stakeholders receive different information. In response to this problem, this study aims to increase contributors’ trust by providing more transparent transactions and reduce the information asymmetry through blockchain implementation in crowdfunding platform. This study reviewed the effects of blockchain implementation in crowdfunding system using Ethereum smart contract. To study the results, a blockchain-based crowdfunding system was developed. The results of this study include comparison between crowdfunding system that implemented blockchain and traditional crowdfunding system in terms of transparency of transactions, immutability of data, CRUD operations, speed of transactions and degree of information symmetry. Trust attributes were also assessed against the developed system. Overall result showed that implementation of blockchain in crowdfunding system provide higher transparency which can reduce the information asymmetry and increase stakeholder’s trust to contribute and raise money via crowdfunding platform.