A cryptocurrency bounty is a reward users receive for performing tasks assigned by a given blockchain or project.
Crypto bounties are an important rewards mechanism that blockchain projects utilize in order to secure the successful accomplishments of certain tasks required by the network. Initially, bounties were intended as a marketing tool to attract users to participate in performing validation services for blockchain projects. Today, crypto bounties have developed significantly beyond the purpose of a simple marketing tool.
One of the main purposes of a bounty rewards program is to promote the initial coin offering (ICO) of a token. Much like traditional initial public offerings, ICOs need to generate a lot of attention to be successful. Bounty reward programs are a great way to create awareness and engagement for a new token. The way bounties work is simple. The project looking to push its ICO announces a promotion campaign in which users perform marketing actions and receive tokens in return. These marketing actions can be anything from posting a photo or video promoting the project to publishing reviews in forums and online community boards. In return for performing these promotional actions, users receive either free or discounted tokens.
Bounty rewards campaigns were a huge phenomenon during the ICO craze in 2017 and 2018. Unfortunately, this marketing tool was often employed by fraudulent projects in order to promote fake tokens. This has made many crypto enthusiasts wary of bounty rewards programs. The Securities and Exchange Commission (SEC) has deemed some ICOs and bounty rewards programs illegal and used them as proof of wrongdoing in front of courts.
Despite numerous controversial cases, bounty rewards programs remain a very widespread marketing tactic for promoting new tokens. Not only that, some blockchain projects incorporate bounty rewards even after the successful launch of the token. Post-ICO rewards schemes are focused on boosting the development of the project. During them, developers are incentivized to go through the code of the project and localize bugs. In addition, bounty rewards may be offered for translation services aimed at making the project more globally accessible.
The abundance of bounty rewards programs has created a new persona in the cryptocurrency world — a crypto bounty hunter. Bounty hunters are people pursuing a number of rewards programs, seeking to benefit from all of them simultaneously. Much like bounty hunters in the Wild West, crypto bounty hunters always chase the best-paying rewards programs and race to be the ones to claim the reward.
Even with the high level of controversy surrounding bounty rewards programs, this is still a widely used marketing strategy by cryptocurrency projects.