Whereas initial coin offerings require people to purchase tokens using fiat, initial bounty offerings result in people being rewarded with free or discounted tokens in exchange for their services.
Enthusiasts who dedicate their time and skill to further a project — by completing tasks related to translation, marketing, business development or human resources — can be eligible in an IBO.
This can mean that they’re emotionally invested in a project and more determined to see it succeed, and this approach can be more effective in building a community.
As a result, IBOs require more mental commitment from the receiver.
Those who receive tokens can cash them out at a later stage once they are listed on an exchange, or they can hold on to them in the hope that their value grows.
Upon completion of an ICO, bounty programs may be utilized to obtain feedback on a cryptocurrency project’s code or to compensate for efforts for promoting the coin.
Coders who are able to identify flaws in the blockchain may also be given rewards in the form of bug bounties, and these rewards can run into many thousands of dollars.
Some well-known cryptocurrencies — such as Zcash and Ethereum — have utilized bounty programs to reward developers who assisted in the development of the blockchain.
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