CROWDSOURCE FUNDING SOLUTION BASED ON BLOCKCHAIN TOKENS A Project Presented to the faculty of the Department of Computer Science California State University, Sacramento Submitted in partial satisfaction of the requirements for the degree of MASTER OF SCIENCE in Computer Science by Sumukha Shegakula Nagaraj FALL 2018 © 2018 Sumukha Shegakula Nagaraj ALL RIGHTS RESERVED ii CROWDSOURCE FUNDING SOLUTION BASED ON BLOCKCHAIN TOKENS A Project by Sumukha Shegakula Nagaraj Approved by: __________________________________, Committee Chair Dr. Jinsong Ouyang, Ph.D. __________________________________, Second Reader Dr. Haiquan Chen, Ph.D. ____________________________ Date iii Student: Sumukha Shegakula Nagaraj I certify that this student has met the requirements for format contained in the University format manual, and that this project is suitable for shelving in the Library and credit is to be awarded for the project. __________________________, Graduate Coordinator ____________________ Dr. Jinsong Ouyang, Ph.D. Date Department of Computer Science iv Abstract of CROWDSOURCE FUNDING SOLUTION BASED ON BLOCKCHAIN TOKENS by Sumukha Shegakula Nagaraj In this generation, when an entrepreneur wants to bring his ideas to life he will start searching for funds. There are people around the globe who have small amounts of money that they can invest in ideas that might grow bigger or solve problems faced by them in real world, but for an entrepreneur it’s a very challenging task to reach out these investors. To solve this problem there are crowdfunding sites such a Kickstarter and Indiegogo which act as a platform for these entrepreneurs to pitch their ideas to investors. These trusted third-party sites act as escrow for the investments to help the investors from being scammed. Our application replaces intermediaries such as Kickstarter to provide a platform for entrepreneurs to raise funds and for investors to invest in projects that interest them. The entrepreneurs can raise funds by issuing tokens to investors investing in their project. These tokens are immutable and impossible to forge. There are smart contracts built according to the investors and Entrepreneurs to mediate the risk taken by the investors. Smart contracts are deployed on blockchain, they contain steps and policies that are executed according to the agreement and pay incentives to the investor as the idea is built and sold to public. v This application is built using Remix IDE, Visual studio code editor, employing languages such as Javascript and solidity. It uses Ethereum blockchain network for storing and processing smart contract transactions. _______________________, Committee Chair Dr. Jinsong Ouyang _______________________ Date vi DEDICATION To my family Who instilled courage in me to believe anything I dream is possible to achieve To my friends Who helped me to accomplish my dreams “Inspiring passion in family and friends has more enduring value than just staying alive for them” Finally to my almighty God vii ACKNOWLEDGEMENTS This project has helped me widen my technical expertise and would not have been possible without the assistance of my mentors and guides. It has been an excellent learning experience building this application. I would like to thank my project guide Dr. Jinsong Ouyang for giving me this opportunity to build this application and enhance my application developing skills required for gaining a competitive edge over other candidates in the job market. Dr. Jinsong Ouyang has been supportive and motivating to drive me towards completion of this project. All his valuable inputs has helped me to navigate through the project building phase and improve my approach and technologies. I would like to acknowledge and appreciate my second reader Dr. Haiquan Chen for his efforts in reviewing the project report and for giving valuable feedback. I also would like to thank Jay Bibodi for his valuable suggestions for this application. Finally, I would like to acknowledge my sister’s support and motivation which helped me to keep my focus intact towards achieving my goal. There are innumerable friends who helped me during this project, I am grateful to them. viii TABLE OF CONTENTS Page Dedication ......................................................................................................................... vii Acknowledgement ........................................................................................................... viii List of Tables .................................................................................................................... xii List of Figures .................................................................................................................. xiii Chapter 1. INTRODUCTION .........................................................................................................1 1.1 Traditional fundraising problem and solution....................................................1 1.2 Purpose ...............................................................................................................2 2. BACKGROUND ...........................................................................................................4 2.1 Bitcoin and the Blockchain ................................................................................4 2.2 Ethereum ............................................................................................................8 3. CROWDFUNDING DAPP REQUIRNMENTS .........................................................13 3.1 Overview ..........................................................................................................13 3.2 Campaign creation and management ...............................................................15 3.3 Investing Ether into campaigns ........................................................................16 4. DEVELOPMENT TOOLS ..........................................................................................17 ix 4.1 Solidity .............................................................................................................17 4.2 Remix ...............................................................................................................17 4.3 Visual studio code ............................................................................................18 4.4 Metamask .........................................................................................................19 4.5 Testnet ..............................................................................................................19 4.6 IPFS..................................................................................................................20 5. DESIGN .......................................................................................................................21 5.1 System architecture ..........................................................................................21 5.2 User interface ...................................................................................................24 5.3 Ethereum Smart contract design ......................................................................26 6. IMPLEMENTATION OF CROWDFUNDING DAPP...............................................29 6.1 Campaigns listing.............................................................................................29 6.2 Campaign details ..............................................................................................34 6.3 Campaign investment.......................................................................................38 6.4 Campaign Creation ..........................................................................................40 6.5 Campaign creator dashboard............................................................................46 6.6 Campaign investor dashboard ..........................................................................48 7. EVALUATION............................................................................................................50 x 7.1 Crowdfunding dapp transactions and their costs .............................................50 7.2 Ethereum platform ...........................................................................................51 8. CONCLUSION ............................................................................................................52 9. BIBLIOGRAPHY ........................................................................................................53 xi LIST OF TABLES Tables Page Table 1 Crowdfunding transaction costs........................................................................... 50 xii LIST OF FIGURES Figures Page Figure 1 Bitcoin transaction chain of ownership ................................................................ 5 Figure 2 A simple blockchain structure .............................................................................. 6 Figure 3 Crowdfunding dapp platform ideology .............................................................. 13 Figure 4 Remix IDE in chrome browser ........................................................................... 18 Figure 5 Testnets available in Metamask.......................................................................... 20 Figure 6 A basic crowdfunding dapp architecture ............................................................ 21 Figure 7 Library component using Metamask to communicate with Ethereum nodes .... 22 Figure 8 crowdfunding app user interface design ............................................................