A crypto bounty is a rewards program that is used by blockchain projects owners to incentivize users who perform certain tasks that aid the success of their projects. Initially, bounties were a marketing tool to attract users to participate in performing validation services for blockchain projects. Today, crypto bounties have developed beyond that.
Bounty programs essentially give out rewards or tokens for those who undertake specific tasks in order to promote the ICO. Just like traditional initial public offerings, ICOs need to drive a lot of awareness to be successful. Bounty reward programs are used to create awareness and engagement for a new token.
The project seeking to launch an ICO announces a promotion campaign where users perform marketing tasks and receive tokens in return. These tasks vary from posting a photo or video promoting the project on several social media channels to publishing reviews in forums, and online community boards, and writing blog posts about the project. As a reward for performing these marketing tasks, users receive either free or discounted tokens from the project owners.
Bounty rewards campaigns were popular during the ICO boom in 2017 and 2018. However, this marketing tool was regularly used by fraudulent projects to promote fake tokens. This has made many crypto enthusiasts skeptical of bounty rewards programs. The Securities and Exchange Commission (SEC) has deemed some ICOs and bounty rewards programs illegal due to the high rate of fraud recorded.
Criticism of Bounty Programs
During the Bitcoin and ICO bubble of 2018, some ICO bounty programs began to be scrutinized for their similarity to pump-and-dump schemes in over-the-counter (OTC) stop markets. Despite the criticisms towards bounty rewards programs, it’s still a commonly used strategy for promoting new tokens. Some blockchain projects still have bounty programs after their ICO to boost the development of the project.
During Post ICO, developers are incentivized to go through the code of the project and localize bugs. Also, bounty rewards may be offered for translation services aimed at making the project more globally accessible.