Final answer:
Crowdfunding is a collaborative funding method conducted mainly online, used to raise financial support for projects and initiatives. Platforms like Kickstarter enable individuals to contribute, bypassing traditional financing methods and often involve social incentives.
Step-by-step explanation:
Crowdfunding is a method of raising capital through the collective effort of friends, family, customers, and individual investors. This approach taps into the collective efforts of a large pool of individuals—primarily online via social media and crowdfunding platforms—and leverages their networks for greater reach and exposure.
Crowdfunding platforms, such as Kickstarter, are web-based and allow people to solicit funds for an idea, project, or cause. These platforms bypass traditional forms of financing, such as bank loans or venture capital, enabling people to donate money to projects they want to support. This can include a wide range of areas like producing a new product, creating a book, or supporting a social cause.
Crowdsourcing and crowdfunding efforts can leverage social pressures and personal appeals to generate contributions for public benefits, such as local community projects or educational institution endowments. An excellent example of crowdsourcing is Wikipedia, where people volunteer their knowledge and time to create and edit articles.