Bounty

What Is a Bounty?

A bounty is a sum paid by a government or business entity to reward certain activities or behavior to reach an economic goal or solve a problem.

Key Takeaways


  • In the world of cryptocurrency, 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 by which coders are incentivized to detect and report bugs, particularly those related to security weaknesses.
  • The U.S. Securities and Exchange Commission uses a bounty program, or "Whistleblower Program," that encourages individuals to report securities law violations.

Understanding a Bounty

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

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

Bounties and Cryptocurrencies

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

An ICO is the crypto equivalent of an initial public offering (IPO), and it's used to raise funds. However, the coins in an ICO do not always result in equity ownership, unlike an IPO where the shares bought always lead to equity ownership in the issuer. A bounty program essentially 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 amount of audience engagement. Meanwhile, developers often receive bounties in the form of tokens for their part in coding the project.

In the post-ICO stage, bounties are used to incentivize programmers to detect bugs and give feedback on other issues. These are called "bug bounties," as coders are rewarded to specifically test 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, particularly those related to security weaknesses.

The purpose of these programs is to find and fix bugs before the greater public is aware of them and prevent large-scale hacking abuse. Several technology 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 implemented bug bounty programs.

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 businesses, the top five public bounty programs, by the total amount awarded, come from Verizon Media, Uber, PayPal, Shopify, and Twitter.

The SEC and Bounties

The U.S. Securities and Exchange Commission uses a bounty program, officially called its "Whistleblower Program," that incentivizes whistleblowers to report possible securities law violations.

Whistleblowers help the SEC identify possible fraud and other violations, limiting damage to investors. The SEC is authorized to provide monetary rewards for those who report high-quality information that leads to an enforcement action in which over $1,000,000 in sanctions is ordered. The range of rewards is between 10% and 30% of the money collected.

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

Bounties and Subsidies

There are various forms of bounties and subsidies paid to industries and taxpayers in the U.S. There are farm subsidies to help support farms and sugar subsidies to bolster the agriculture industry.

The energy industry has received subsidies like loan guarantees for clean energy, tax credits for expenditures, as well as money for research and development.

A bounty or subsidy can help industries invest in capital equipment designed to better the country or reach a desired outcome like cleaner-burning fuel.

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

What Is the Highest Bounty Paid By the SEC?

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

Where Did Crypto Bounty Programs Originate?

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

What Skills Are Required to Be a Bug Bounty?

Software and computer technical skills like the fundamentals of inter-networking, IP addresses, MAC addresses, OSI stack, and TCP/IP stack are among the skills required to be a bug bounty.

The Bottom Line

A bounty is paid by a government or business entity to reward certain activities to solve a problem. The U.S. Securities and Exchange Commission pays bounties through its whistleblower program and in the world of cryptocurrency, bounty programs are used by coin developers to incentivize activity before an initial coin offering.

Article Sources
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  1. HackerOne. "Top 10 Bounty Programs 2020."

  2. U.S. Securities and Exchange Commission. "Whistleblower."

  3. U.S. Securities and Exchange Commission. "SEC Issues Record $114 Million Whistleblower Award." Accessed July 7, 2021.

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