What is a bounty?

A bounty is an amount paid by a government or commercial entity to reward certain activities or behaviors in order to achieve an economic goal or solve a problem.

Key points to remember

  • In the cryptocurrency world, bounty programs are used by coin developers to incentivize actions before the initial coin offering (ICO).
  • Bug bounty programs are offered by websites and organizations through which coders are incentivized to find and report bugs, especially those related to security vulnerabilities.
  • The United States Securities and Exchange Commission operates a bounty program, or “Whistleblower Program,” which encourages individuals to report violations of securities laws.

Understanding a bounty

A bounty can be a reward by a local government to help track criminal activity. Some governments may offer a bonus or subsidy to an individual who enlists in that country’s armed forces.

A bounty can also be a subsidy paid by the government to encourage certain industries. Bounties are evident in the cryptocurrency space and in the technical world to combat piracy.

Bounties and Cryptocurrencies

In the cryptocurrency world, bounty programs are used by coin developers to incentivize actions before the initial coin offering (ICO).

An ICO is the cryptographic equivalent of an initial public offering (IPO), and it is used to raise funds. However, coins in an ICO do not always result in an equity investment, unlike an IPO where the shares purchased always lead to an equity investment in the issuer. A bounty program basically gives rewards or tokens to those who undertake specific tasks to promote the ICO.

In the pre-ICO stage, social media influencers, bloggers and digital marketers promote the ICO on their platforms, receiving compensation based on the level of audience engagement. Meanwhile, developers often receive bounties in the form of tokens for their part in coding the project.

In the post-ICO phase, bounties are used to incentivize programmers to catch bugs and give feedback on other issues. These are called “bounties” because coders are rewarded for specifically testing for flaws in the system.

Bug Bounties

Bug bounty programs are offered by websites and organizations where coders are incentivized to detect and report bugs, especially those related to security vulnerabilities.

The purpose of these programs is to find and fix bugs before the general public becomes aware of them and to prevent large-scale piracy abuse. Several tech giants use bug bounties, including Meta, Google, Apple, AOL, Yahoo!, Microsoft, and Reddit.

Wall Street firms like Goldman Sachs and the United States Department of Defense have bug bounty programs in place.

Bug bounty programs allow organizations to leverage the power of a large group of coders and hackers.

According to HackerOne, which hosts bug bounty programs for large companies, the top five public bounty programs, by total amount awarded, come from Verizon Media, Uber, PayPal, Shopify and Twitter.

The SEC and bounties

The United States Securities and Exchange Commission uses a bounty program, officially called its “Whistleblower Program”, which incentivizes whistleblowers to report possible violations of securities law.

Whistleblowers help the SEC identify possible fraud and other violations, limiting damages to investors. The SEC is authorized to offer monetary rewards to those who report high-quality information that leads to enforcement action in which more than $1,000,000 in penalties are ordered. The range of rewards is between 10% and 30% of the collected money.

Under the bounty program, the SEC has awarded about $901 million to 163 people since issuing its first award in 2012.

Bonuses and subsidies

There are various forms of bounties and subsidies paid to industries and taxpayers in the United States. There are agricultural subsidies to help support farms and sugar subsidies to strengthen the agricultural industry.

The energy industry has received grants such as clean energy loan guarantees, expense tax credits, and research and development funds.

A bounty or grant can help industries invest in capital goods designed to improve the country or achieve a desired outcome like cleaner fuel.

The coal, nuclear, wind, solar, oil and gas industries all receive subsidies or bonuses from the US government each year.

What is the highest premium paid by the SEC?

In October 2020, the SEC announced a record price of $114 million, consisting of approximately $52 million from the SEC and approximately $62 million from another agency. The next highest award is $50 million given to an individual in June 2020.

Where Do Crypto Bounty Programs Come From?

Bounty programs have their origins in the world of digital video gaming and benefits are offered to gamers who help with game development, especially those who identify bugs in the game.

What are the skills required to be a Bug Bounty?

Technical software and computer skills such as internetwork fundamentals, IP addresses, MAC addresses, OSI stack, and TCP/IP stack are among the skills required to be a bug bounty.

The essential

A bounty is paid by a government or commercial entity to reward certain activities aimed at solving a problem. The United States Securities and Exchange Commission pays out bounties through its whistleblower program and in the cryptocurrency world, bounty programs are used by coin developers to incentivize activity ahead of an initial coin offering.

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