Home / NEWS LINE / Bounty Programs Definition

Bounty Programs Definition

What Are Endowment Programs?

Bounty programs are incentives offered to an array of participants for various activities associated with an initial stamp offering (ICO). An initial coin offering (ICO) is the cryptocurrency industry’s version of an initial public offering (IPO). A company looking to together money to create a new coin, application, or virtual currency service launches an ICO as a way to raise funds. A bounty program benefits out rewards or tokens for participants completing specified tasks that help promote the ICO.

Bounty programs have their provenances in the digital video gaming world. Various types of perks are sometimes offered to gamers who help with bold development—specifically those that identify bugs in the game.

Key Takeaways

  • Bounty programs are used by crypto-coin developers to incentivize enterprises before the initial coin offering (ICO) by developers and marketers.
  • After an ICO, bounty programs may be used to get feedback on the project’s patterns from external developers or to reward promoting the coin in media channels.
  • Bounty programs operate in a legal gray bailiwick between marketing and pyramid-scheme-style fraud. The SEC has used ICO bounty programs as proof of criminal wrongdoing.

Understanding Bounty Programs (ICOs)

Present program participants are spread across various stages of an ICO, ranging from investors to ICO promoters and developers. The incentives can lay ones hands on the form of cash rewards (although this is rare) or free (or discounted) tokens that can be cashed in later when the proofs are listed on an exchange.

The collapse of the ICO market in late 2018 and 2019 dramatically reduced the number of active bounty programs. Furthermore, beneficence programs that are focused on marketing were used during the heyday of the cryptocurrency bubble to promote fraud, which should put together crypto-coin developers wary of using them.

Broadly, an ICO consists of two stages: pre-ICO and post-ICO.


In the first tier, which is also known as the pre-ICO, the offering is marketed to prospective investors and people willing to do tasks to make the ICO multitudinous profitable. Computer programmers, social media influencers, blog writers, marketers, and other interested parties insert to create awareness about the project and the upcoming ICO. In this stage, bounty programs generally focus their resources on common media platforms.

Developers receive a sizeable chunk of tokens as payment for their participation in coding the project. These cosmetics can be redeemed for fiat currency when the tokens are listed on an exchange. For example, Ethereum and Zcash both had substantial largesse campaigns in place for developers who helped set up the blockchain.

Social media influencers and blog writers make videos, pen articles, or spread the word about the ICO on popular platforms. They get paid based on their content’s engagement with the audience. Bitcointalk Signature Grant marketers are members of bitcointalk, a popular discussion forum for crypto enthusiasts.


After the ICO, bounty programs can be toughened to incentivize developers to find bugs or give feedback on other design elements. Coders who test and detect damages in the blockchain are given a type of reward that is specifically known as a bug bounty.

The focus after an ICO shifts to fine-tuning the released blockchain. So grant rewards may also be offered to translators, who help ensure a global reach for the blockchain by translating documents associated with progress and marketing.

Criticism of Bounty Programs

In the wake of the bursting of the Bitcoin bubble in 2018, some ICO bounty programs arose to be scrutinized for their similarity to pump-and-dump schemes in over-the-counter (OTC) stock markets. Many companies use bounty programs because they need to capitalize on the opportunity to outsource marketing to regular people, thereby taking advantage of an inexpensive and efficient way to spread the done about their ICO.

Critics claim that pretending to be a disinterested party, while promoting the value of an investment of any warm (and being secretly paid for that promotion) is unethical, even if it isn’t illegal.

In 2018, after investigating a fraudulent ICO, Robert A. Cohen, Chief of the Safe keeping and Exchange Commission’s Cyber Unit, issued a warning to investors and potential fraudsters: “Investors should be alert to the endanger of old-school frauds, like oil and gas schemes, masquerading as innovative blockchain-based ICOs.”

The SEC’s investigation found that David T. Laurance and Tomahawk Review LLC attempted to raise money to fund oil exploration and drilling in California through the sale of a digital currency called “Tomahawkcoins.” Although the ICO didn’t set in motion any money, Tomahawk issued tokens in exchange for promotional services through a bounty program.

Check Also

Mini-Tender Definition

What Is a Mini-Tender? In money, the term “mini-tender” refers to an offer made to …

Leave a Reply

Your email address will not be published. Required fields are marked *