Why Bounty Campaigns Do More Long-Term Harm than Good to the Crypto Ecosystem
Bounty Campaigns have become one of the most important marketing tools in the ICO market. However, the increasingly non-transparent communication practices of many ICOs is not only misleading investors, it is also threatening to damage the entire crypto ecosystem. Crypto startups must finally learn how to communicate honestly in order to guarantee long-term success.
Anyone wanting to invest in an ICO is spoilt for choice. Countless projects vie for the attention of potential investors whose money they need to implement their ideas. The buzz on social media and blogs is loud and dim. Like at a bazaar. So-called bounty campaigns are one of the greatest drivers of the hype. The term bounty stems from the world of online gaming platforms and describes, for example, a reward users receive for contributing to the continued development of a game. The mechanism behind bounty campaigns is simple. Companies launching a product or service on the market reward users for accomplishing certain tasks during the launch process — a nice thought in and of itself, and one that suits the collaborative and decentralized promise of the crypto world. However, this nice idea has since become its own industry, a marketing machine whose primary goal is to build a community and garner attention at any price. At first, this might sound understandable, or at least not reprehensible. Who can blame someone for trying to advertise a product or service as best as possible?
Why and how ICOs use bounty campaigns
Bounty campaigns have since become an almost integral part of every ICO campaign. Startups wanting to realise an ICO use a bounty program to reward so-called bounty hunters with tokens for fulfilling tasks that are useful and important for a successful ICO. In addition to bug reporting, this might also include the translation of white papers and feedback on the technical framework of the cryptocurrencies to be issued, and, especially, any number of marketing activities. Social media bounties and article writing bounties are facing particular scrutiny. The former rewards likes, retweets, shares, and posts on channels like Facebook, YouTube, Twitter, and Reddit, while the latter incentivises users who publish positive articles about the respective ICO on their own blogs or Medium accounts. In the short-term, this might be worthwhile for ICOs as the outsourcing of immensely important marketing activities saves a substantial amount of money. Money that would otherwise have to be invested in external agencies or in-house personnel. It is also absolutely understandable that crypto startups resort to high-volume marketing in order to be heard in the midst of countless ICOs. The problem, however, is that this obvious marketing is not earmarked as such, but instead appears like actual support.
Why bounty campaigns mislead investors and cause long-term damage to the crypto ecosystem
Let’s say I plan on purchasing a new vehicle and am wavering between two models by different manufacturers. While leafing through the newspaper over breakfast on Sunday morning I see a test report on exactly these two vehicle models. The report suggests that model A is significantly better than model B and lists various facts to explain why. This report might influence my purchasing decision, the result being that I head to an auto dealership the next day to buy model A. So far so good. But what if this test report was not an independent journalistic article? Instead, the manufacturer of model A had paid for this positive test report. Furthermore, what if this was not mentioned, or if the facts cited were perhaps inaccurate? It would be an obvious scandal, which would draw the attention of consumer protection.
However, this is precisely what is happening at the moment — on sites like Medium and Steemit — if you search for ICO assessments. You can find droves of articles gushing over the enormous potential of a specific ICO and enticing readers to invest in said ICO. One must, however, assume that the majority of these positive articles are not based on the author’s personal conviction. Rather, they are content published by authors who receive tokens as reimbursement. Ergo sponsored posts. The fact that this is not independent but instead paid content disguised as personal opinion is, of course, mentioned nowhere. The result is a completely murky information landscape. One where investors are having an increasingly difficult time finding believable information and assessments on which they can independently base their investment decisions. The clear separation between journalistic and marketing content, or rather between personal opinion and paid promotions, is a common standard in established industries, one which contributes to consumer protection. Even the young influencer scene is gradually developing regulations for labelling paid product advertisements. By contrast, the completely untransparent excess of bounty campaigns is misleading investors and damaging the entire ecosystem.
Why we have to communicate more honestly for sustainable success
The crypto ecosystem is in its fledgling stages and is still viewed with skepticism by many established industries and media. Though this critique is somewhat unjustified, with regards to the lack of transparency it hits the nail on the head. In order to establish a lasting trust in blockchain technology and crypto companies across large sections of society, we as the crypto community must own up to this legitimate critique. We have to learn to communicate more honestly to ensure sustainable success. It is understandable and valid that crypto startups attempt to attract attention with all the marketing tricks in the book. However, a line must be drawn at the point where consumers, or rather investors, are being misled by completely non-transparent communications. Though this may have a promising short-term effect at fuelling the hype around an ICO, these bounty campaigns and their sponsored accolades will lead to medium-term disappointment as inexperienced users fall right into their traps. In order to ensure lasting success, the crypto ecosystem as a whole must establish trust across broad swathes of society. This, in turn, will only happen if we communicate honestly and transparently with those whose trust we hope to gain.
Alethena is the first swiss blockchain-asset rating that is 100% independent, transparent and neutral. Visit www.alethena.com for more information.
