What Are Crypto Bounty Programs And How It Works

In the Wild West, the reward for catching outlaws was called a bounty, and the people who caught them were called bounty hunters. You can think of the world of cryptocurrencies as an online version of the Wild West, with bounties and bounty hunters.

Crypto rewards are tokenized incentives and reward mechanisms employed by blockchain projects. The people who run these bounty programs are known as bounty hunters and they receive huge rewards every time they complete these programs. They can follow several rewards programs simultaneously, although they mostly only go after the highest paying programs.

For example, Ethereum has a bounty program to help the network identify bugs in its protocol. It asks the community to locate such bugs and rewards them for each vulnerability they find.

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Bug fixing was the main goal of the bounty programs. However, after noticing the buzz they created among users and developers, many projects began employing bounty programs as precursors to their ICOs, using them to build hype around a token before it was released. As such, bounty programs are often confused with airdrops. However, these two concepts are not the same and have quite a few differences.

Let’s explore these differences and understand how crypto rewards programs work.

How do bounty programs help crypto projects?

Most of the time, crypto rewards programs are used to promote the initial coin offering (ICO) of a token. Much like an initial public offering, an ICO allows entrepreneurs to raise funds to launch a new cryptocurrency. In exchange, investors receive a certain amount of those tokens. However, unlike an IPO, the project is not made public after the ICO. Instead, it remains 100 percent in the hands of the developers, with investors simply profiting from the increased value of the coin.

Since ICOs are so important, entrepreneurs use marketing strategies like bounty programs to help build recognition and attract investors. On the other hand, bug bounty programs help developers secure their project code and ensure there are no backdoors for bad actors to hack into the system.

How do the rewards programs work?

Bounty programs are usually advertised by the entrepreneur or project owner looking to boost their ICO. They usually advertise a promotional campaign where interested investors are required to perform selected tasks and receive tokens in return. Tasks range from posting photos to promoting videos to posting reviews.

Due to their success, some projects continue to employ bounty programs long after ICOs. At this stage, users are usually rewarded for locating bugs in the code.

What is the difference between crypto rewards programs and airdrops?

The main difference between bounty programs and airdrops lies in the nuances of tasks and rewards. To start with, you need to perform reward-related tasks repeatedly until the campaign is active. Airdrop tasks, on the other hand, are a one-time event.

Also, you have to finish smaller tasks for airdrops, and you don’t even need a specific skill to finish them. However, you need specific skills, time, and concentrated efforts to get rewards. This is because the rewards programs are relatively more challenging.

Where to find crypto rewards programs?

Bounty programs had become a phenomenon during the ICO and Bitcoin craze of 2017-18. So much so that some scam projects started to emerge that had bounty hunters promoting fake tokens. At one point, the Securities and Exchange Commission scrutinized some of these programs due to their similarity to pump-and-dump schemes.

So naturally, the bounty hunters needed to be more specific with their search for credible shows. So how do you find good rewards programs? Most legitimate projects have a page dedicated exclusively to bounty programs, such as Coinbase and Ethereum.

However, rewards programs find themselves in a legal gray area: caught between a marketing program and a pyramid scheme-style fraud. Critics claim that companies can take advantage of these cheap campaigns, using them to spread the word about bogus projects. On the other hand, bounty hunters are secretly paid to promote a project they are not even interested in, it is unethical, if not illegal.

(Edited by : priyanka deshpande)