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X Prize Foundation will crowdfund three new prizes. How it's a game-changer.

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The X Prize Foundation, founded in 1994, rocketed to fame in 2004 when it awarded its first prize, of $10 million, to Scaled Composites for the development of a commercial spaceship. The foundation has since expanded beyond aerospace development to bankroll the invention of more fuel-efficient cars, oil spill cleanup techniques, advanced lunar technologies, and now, ocean research.

All of X Prize's competitions, as well as similar contests from NASA, DARPA, and others, have operated on the same model: the prize organizer identifies which problem is worth addressing. It then outlines what a solution to that problem should look like: How high must it fly? How fast must it go? How big? How small?

After that, companies and individuals will spend millions – in total sometimes five to ten times what the competition awards to the winner, says Bunje – to answer the problem. At the end of it all is a cash prize for the winner, as well as probable contracts and other opportunities for all the entrants.

It’s the first part of the contest – identifying which problem to tackle and how competitors should tackle it – that has raised questions from analysts in recent years.

“One of the tricks of these prizes is getting the specifications for how to win the prize right,” says Molly Macauley, Vice President for Research and Senior Fellow at Resources for the Future.

What X Prize or other cash-flush organizers ask for can in effect shape the direction and goals of scientific inquiry, spurring vast research momentum toward a narrow goal, she says.

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