Investor's wiki

Bounty Programs

Bounty Programs

What Are Bounty Programs?

Bounty programs are incentives offered to a variety of participants for different activities associated with a initial coin offering (ICO). An initial coin offering (ICO) is the cryptocurrency business' form of an initial public offering (IPO). A company hoping to fund-raise to make another coin, application, or virtual currency service dispatches an ICO as a method for raising funds. A bounty program gives out rewards or tokens for participants finishing determined jobs that assist with advancing the ICO.

Bounty programs have their beginnings in the digital video gaming world. Different types of advantages are now and again offered to gamers who assist with game development — explicitly those that recognize bugs in the game.

Understanding Bounty Programs (ICOs)

Bounty program participants are spread across different stages of an ICO, going from investors to ICO advertisers and designers. The incentives can appear as cash rewards (albeit this is rare) or free (or discounted) tokens that can be cashed in later when the tokens are listed on an exchange.

The collapse of the ICO market in late 2018 and 2019 decisively decreased the number of active bounty programs. Furthermore, bounty programs that are centered around marketing were utilized during the prime of the cryptocurrency bubble to advance fraud, which ought to make crypto-coin engineers careful about utilizing them.

Extensively, an ICO comprises of two stages: pre-ICO and post-ICO.


In the principal stage, which is otherwise called the pre-ICO, the offering is marketed to prospective investors and individuals ready to take care of tasks to make the ICO more productive. Computer programmers, social media forces to be reckoned with, blog authors, marketers, and other closely involved individuals work to make awareness about the project and the impending ICO. In this stage, bounty programs generally center their resources around social media platforms.

Designers receive a sizeable piece of tokens as payment for their participation in coding the project. These tokens can be recovered for fiat currency when the tokens are listed on an exchange. For instance, Ethereum and Zcash both had substantial bounty crusades in place for engineers who aided set up the blockchain.

Social media powerhouses and blog journalists make videos, compose articles, or spread the word about the ICO on famous platforms. They get compensated in view of their substance's engagement with the crowd. Bitcointalk Signature Bounty marketers are individuals from bitcointalk, a well known discussion forum for crypto lovers.


After the ICO, bounty programs can be utilized to boost engineers to track down bugs or give feedback on other design components. Coders who test and recognize defects in the blockchain are given a type of reward that is explicitly known as a bug bounty.

The concentration after an ICO movements to fine-tuning the delivered blockchain. So bounty rewards may likewise be offered to interpreters, who assist with guaranteeing a global reach for the blockchain by deciphering records associated with development and marketing.

Analysis of Bounty Programs

In the wake of the blasting of the Bitcoin bubble in 2018, some ICO bounty programs started to be examined for their similitude to siphon and-dump schemes in over-the-counter (OTC) stock markets. Many companies use bounty programs since they need to capitalize on the opportunity to re-appropriate marketing to normal individuals, thereby making the most of a modest and efficient method for spreading the word about their ICO.

Pundits claim that professing to be an unbiased party, while advancing the value of an investment of any sort (and being secretly paid for that promotion) is untrustworthy, even in the event that it isn't illegal.

In 2018, subsequent to researching a fraudulent ICO, Robert A. Cohen, Chief of the Security and Exchange Commission's Cyber Unit, issued a warning to investors and expected fraudsters: "Investors ought to be alert to the risk of old-school frauds, similar to oil and gas schemes, taking on the appearance of creative blockchain-based ICOs."

The SEC's investigation found that David T. Laurance and Tomahawk Exploration LLC endeavored to fund-raise to fund oil exploration and drilling in California through the sale of a digital currency called "Tomahawkcoins." Although the ICO collected no money, Tomahawk issued tokens in exchange for promotional services through a bounty program.


  • Bounty programs operate in a legal gray area among marketing and fraudulent business model style fraud. The SEC has utilized ICO bounty programs as proof of criminal bad behavior.
  • Bounty programs are utilized by crypto-coin designers to boost activities before the initial coin offering (ICO) by engineers and marketers.
  • After an ICO, bounty programs might be utilized to get feedback on the project's code from outer designers or to reward advancing the coin in media channels.