Hold onto your butts, creators, because Kickstarter is going full blockchain.
In a blog post by CEO Aziz Hasan and co-founder Perry Chen on Thursday, the crowdfunding platform announced that its “commitment to a more open, collaborative, and decentralized future” via blockchain, the technology behind cryptocurrencies like Bitcoin. The first step will be establishing an independent organization that will oversee the development of an open source, blockchain-based system that more or less works the way Kickstarter already does. When it’s complete, Kickstarter will switch to it. This protocol will eventually be available to anyone, Kickstarter said, including upstarts trying to compete with it.
“As a first step, we’re supporting the development of an open source protocol that will essentially create a decentralized version of Kickstarter’s core functionality,” Hasan and Chen wrote in the post. “This will live on a public blockchain, and be available for collaborators, independent contributors, and even Kickstarter competitors, from all over the world to build upon, connect to, or use. We think bringing all that we’ve learned about crowdfunding since 2009 to inform the development of a decentralized protocol will open up exciting new opportunities for creative projects to come to life.”
In addition to the independent entity designated to build the blockchain system, the announcement stated Kickstarter will also create an independent governance lab to oversee “development of the protocol governance.” It is partnering with blockchain company Celo, which uses a proof of stake method it says uses just a “tiny fraction” of the energy consumed by projects like Bitcoin and Ethereum and is thus environmentally friendly. (Celo claims to be carbon-negative, though this is based on offsets, a method that critics often say amounts to greenwashing.)
Kickstarter says the development will begin in the first quarter of 2022, according to Bloomberg, and it expects the transition to be complete by the end of the year. Bloomberg noted that Kickstarter never achieved the hyper-growth status that early investors may have been expecting—it became a public benefit corporation, which is a type of company that doesn’t focus exclusively on profit, in 2015—and crowdfunding projects have largely switched to blockchain technology. Last year, the company laid off a massive proportion of its workforce.
How this will actually work, beyond Kickstarter being able to yell “blockchain” like a spell to summon investors or maybe getting a cut of every project that runs on the resulting protocol, is unclear. A white paper explaining how the Kickstarter-backed blockchain protocol will work won’t be released for a few weeks. TechCrunch wrote:
While the “stake” in Kickstarter’s model has been a completed physical or digital product, newer blockchain crowdfunding platforms are upending that model by giving users tokens tied to the projects which can accrue in value as the product matures. Some of these efforts are questionably legal, but there are endless ways to obfuscate what exactly is being bought and sold by users.
The announcement did promise that “as a user, the Kickstarter experience you’re familiar with will stay the same.”
“There will be a lot more detail in the white paper released in the coming weeks,” Kate Bernyk, a Kickstarter spokesperson, told Gizmodo via email. Asked about specifics—such as whether Kickstarter will transition to a token system, and if so, how users would be guarded against price fluctuations—Bernyk directed Gizmodo to another blog post in which the company specified, “Backers can continue to utilize normal credit and debit cards to pledge to campaigns, and creators can continue to receive normal currency to fulfill their projects.”
Reception to the news from users, especially in the indie games niche where Kickstarter has historically been popular, appeared to be mixed at best. A thread on Reddit’s r/boardgames community was full of negative reactions, while a number of game designers, creators, and project backers announced their disappointment on Twitter.
4:10 p.m. ET: This post has been updated with additional comment from Kickstarter.