Credit: By James Tabor, CEO of MEDIA Protocol
Congratulations, as CEO of crypto Company X, you’re about to embark on your first initial coin offering (ICO). In an effort to stimulate engagement with the broader crypto community, you decide to implement an ICO bounty program — a system that encourages individuals to complete a series of tasks in exchange for tokens that can be used in the ecosystem. “These programs have been successful in garnering interest in crypto platforms in the past,” you think. “What could go wrong?”
One morning, you wake up to realize that you’ve inadvertently caught the attention of a select few individuals who have employed the power of thousands of bots to hijack your program, stealing your tokens and sending your company back to square one. It’s unfortunate to admit, but this is the current state of bounty programs today, and it’s not a fault of the bots, it’s a fault of the system.
At its core, bounty programs represent one of the most effective forms of organic marketing. Companies incentivize individuals to complete myriad tasks based on varying levels of difficulty — from joining a whitelist, to sharing an article, to writing a blog post — all in exchange for tokens. The process mutually benefits both parties: For the company, it educates and motivates the community about the logistics of their program, while for the individual, it rewards them for their hard work.
More recently, however, large-scale actors in the community, otherwise known as bounty hunters, have manipulated the system by incorporating automated algorithms to complete these tasks at a fraction of the time of traditional processes. It’s a problem that only seems to be getting worse as ICOs begin to attract mainstream interest in the space. Crypto companies simply cannot perform the due diligence necessary to keep up with the pace.
For bounty programs to survive, industry experts will need to rally behind material change in the system. At first glance, this may seem like an impossible task; however, by setting up predetermined governance practices that police bad actors in the space, more individuals will be encouraged to complete tasks organically — which will increase community engagement. This is advertising 101. It is far more effective for 1,000 unique participants to actively engage in a given program and receive one token than it is for 50 sponsored participants to monopolize the system and receive 20.
So what can we do? Institute safeguards. Prior to launching a bounty program, crypto companies should set engagement parameters into the blockchain to allow the community to more efficiently regulate the use of bots on their platform. A single person, for instance, cannot feasibly generate 100,000 retweets without the use of automated processes — meaning that most, if not all, of the resulting engagement is fake. However, by instituting a system to flag high frequency IP addresses, companies can both mitigate risk and send a clear signal to bad actors that fraud will not be tolerated.
Mobile engagement platform SwipeCrypto has already made great strides in this regard, implementing creative strategies to ensure the integrity of their platform. Most notably, for a user to receive incentive-based tokens using the service, they must first “swipe left” to interact with a piece of content. Every "swipe left" is digitally signed to reduce bot traffic. Automatic fraud detection mechanics such as traffic source and pattern analysis further minimize bad actor risks within the ecosystem.
This is one notable example, but companies can employ a variety of different tools here, from requiring users to have a certain number of social media followers to implementing invite-only Know Your Customer (KYC) protocols to verify trusted participants in the space. Using the blockchain, all of this is possible; companies just need to take the initiative.
While this is certainly an exciting prospect, it does overlook one key point: To truly instill change, companies will not only have to eliminate bad actors from the space, but they will also have to provide trusted actors with the resources necessary to participate in the first place. As many can attest, it can be quite costly for individuals to engage in one bounty program, let alone two or three. Each task requires some form of active participation from the user, and in return, they receive a small amount of tokens that can only be used on one platform.
With this in mind, imagine the potential benefits of creating one streamlined interface that provides universally-accepted tokens for tasks that can be completed on a variety of platforms. Users looking to participate in a bounty program today could then receive tokens that they can put toward a different program tomorrow. And it’s not just the community that benefits, it would benefit the companies as well. As more users enter the space, the stronger the governance layer becomes, which provides greater accuracy to the system.
As the industry sets its sights on yet another year of monumental growth, crypto companies everywhere are looking for ways to engage with an expanding global audience. While bounty programs have been a long-standing way to do this, many industry experts wonder whether vulnerabilities in the system will prevent the practice from moving forward. Fear not; not only is there a future in bounty programs, but that future is bright. By streamlining processes and increasing accountability, crypto companies can encourage real engagement in the community and ensure that no company ever has to meet the same fate as crypto Company X.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
