The cheat would be: 1. submit cyphertext job with bounty $$ 2. calculate the solution based on the cleartext and encrypt it 3. wait a while--just enough time

The cheat would be: 1. submit cyphertext job with bounty $$ 2. calculate the solution based on the cleartext and encrypt it 3. wait a while--just enough time so that it's plausible that you found the solution based on the cyphertext 4. submit encrypted solution 5. get your bounty back: $$ 6. get the reward for having found the solution: $ 7. now you have $$$, and everybody else who worked harder than you did has nothing A $ based on a system that is that easy to cheat isn't going to be worth very much. Personally I think bitcoin is kind of dumb because from a compete-for-rewards perspective the only thing it has going for it is that it's difficult to cheat in this way. Better would be if we solved the game theoretic issues here so that nobody has an incentive to cheat and the compete-for-rewards work was actually beneficial to society, but so far as I know that doesn't yet exist. There's BOINC (like folding@home but more generic), coupled with gridcoin (which rewards people in crypto for having "volunteered" their compute for use in BOINC). But it only works because there's a centralized authority in charge of which jobs get submitted to BOIC, and that authority cares more about scientific computing than they care about making money.