What are crypto bounty programs and do they still exist?

March 17, 2021

A bounty program in technology refers to a deal set up by organisations, companies and software developers which allows individuals to receive compensation for finding and reporting bugs. This is to make sure the website is as secure as possible and that vulnerabilities are found through the program and not through a malicious hack, for example. In cryptocurrency, a bounty program works in the same way. A crypto bounty program exists to incentivise individuals finding a vulnerability in the blockchain-based project so that the project can be made more secure as well as to help promote the project.

Most commonly, a bounty program is associated with an initial coin offering (ICO). Since an ICO is a way of fundraising, companies use a bounty program for two main reasons:

  1. To look for bugs and issues in the software that need to be resolved, and
  2. For participants to undertake various activities that might promote the coin.

Since the crypto bounty program usually rewards the individual in the project’s native cryptocurrency token, the participants would be interested in seeing that token gain value – which means that they will probably help promote the cryptocurrency project to raise investment.

When does a crypto bounty program take place?

Different types of bounty programs and rewards associated are usually spread across various phases in the ICO. They can be software-focused to help the development team find and resolve bugs to marketing-centric to help encourage individuals to invest and help the fundraising of the project.

This means that the bounty program in a cryptocurrency coin offering can occur before the ICO launches, during the ICO and following the fundraising because marketing, development and maintenance of systems can occur during any time of the cryptocurrency project’s life.

The rewards of a crypto bounty program

The key incentive of a crypto bounty program is in the form of either the native token for free or discounted tokens. These can be cashed out later if and when the token is listed on an exchange. On a very rare occasion, some bounty programs in crypto offer cash rewards.

Do bounty programs still exist?

The ICO market saw a massive crash between late 2018 and early 2019 which reduced the number of projects using the method to raise capital. As a result, the number of bounty programs decreased considerably. While some bounty programs still exist, it’s not nearly as popular a method of marketing and software-securing as it was in the ICO-era.

On top of this, bounty programs have been criticized as a method to market coins which were later discovered as fraudulent. Some projects used the concept to over-market and hype their projects which led to pump-and-dump schemes which encouraged quick profits but little longevity in a cryptocurrency’s life. This has made the community cautious of using them.

How did bounty programs originate?

The first known bug bounty program – the concept from which crypto bounty programs stem – was initiated by a company called Hunter and Ready in 1983. They were looking to outsource software testing of their Versatile Real-Time Executive operating system. Anyone who found an issue would in turn receive a Volkswagen Beetle (a.k.a. Bug). From this, other software companies and devs started using the concept and it became popular in video game testing.