You will no doubt have heard stories from an early Bitcoin adopter who got a lot of free coins through something called a cryptocurrency faucet.
These have been used extensively in the past as a means to complete relatively simple yet manual tasks to claim cryptocurrency handouts. They have been wildly popular as users have chased down the most popular faucets that yielded the most crypto. Some users have even developed algorithms that have tried to take advantage of leaky faucets.
I’ll take a look into the answers to these questions and far more as I teach you the basics of cryptocurrency faucets, and how you can use them.
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What is a Cryptocurrency Faucet?
Most simply stated, a cryptocurrency faucet is a website that gives out small amounts of cryptocurrencies as a reward for doing small tasks. They’re called faucets because the rewards are quite small, like the dripping of water from a faucet, but in this case it is cryptocurrencies that are slowly dripping into your cryptocurrency wallet.
The tasks performed are usually completing a captcha, but it might also involve clicking links or viewing ads. In the case of Bitcoin faucets the payouts are awarded in Satoshi, or one-hundred-millionth of a Bitcoin = 0.000000001 BTC.
Crypto Faucet Example. Source: moonbit.co.in
Most faucets have a minimum payment threshold, so the cryptocurrencies earned through the faucet are deposited into a wallet on the faucet site, and can be withdrawn to the users chosen wallet once the minimum is reached. In some cases this might take just days, but often it can take a week or longer to meet the minimum payout.
So, as you might have already guessed, cryptocurrency faucets aren’t a get rich quick scheme. The real attraction is in the hopes that the value of cryptocurrencies will continue to grow. In this way, a $0.10 faucet payout today might be worth $1 or even $10 at some time in the future.
The Purpose of a Cryptocurrency Faucet
Cryptocurrencies are still quite new, with many people around the world just learning what it is, not to mention how to hold it in cryptocurrency wallets, or how to invest in it and add it to a balanced portfolio of assets.
The first cryptocurrency faucets were Bitcoin faucets, and they were created to spread the word about Bitcoin when it was still very new. The idea was that if people were given Bitcoin they would take the time to learn what it is, and hopefully invest more in the new decentralized currency. It was a risk-free way to get Bitcoin into the hands of the general population.
The Bitcoin faucets were so popular that other cryptocurrencies began offering faucets as well. In addition to giving out free coins, they also serve as information portals about the cryptocurrency they dispense in many cases. It’s an easy way to get new users interested in cryptocurrencies, without having to risk any money. As you would expect, faucets have grown tremendously in popularity as people are always happy to receive something free.
How to Collect From a Cryptocurrency Faucet
First you’ll need to find a faucet, and thanks to their popularity there are sites dedicated to simply keeping track of all the faucets of there. Faucet Dump is one such site, and it lists 420 faucets from 48 different cryptocurrencies. So, you go there and sign up a faucet and you start earning some free coins. Where do the coins go, and what can you do with them?
Bitcoin Faucets from Faucet Dump
In most cases the faucet has a minimum payout amount, so your coins will first go into the micro-wallet provided by the faucet. Once you meet the minimum payout you’re free to transfer your accumulated earnings to your own wallet.
In fact, many faucets will let you enter your wallet address as part of your profile, and once you meet the faucet minimum it will automatically transfer the balance to your cryptocurrency wallet.
What are Micro-wallets?
A micro-wallet is similar to traditional desktop or online wallets, but it differs because it is used to collect small amounts of cryptocurrency, and is usually limited to a small total amount that it can hold.
These micro-wallets are included with your faucet account, and they’re used because the fees to transfer the small amounts paid daily by the faucet would wipe out any earnings. Using a micro-wallet allows you to accumulate a larger amount of cryptocurrency before transferring to your own wallet so the fees don’t eat up the entire transfer.
Why Do Faucets Still Exist?
Image via Fotolia
While cryptocurrency faucets began as a means to educate people about this new asset type, more recently faucets have been used to boost website traffic, or to simply make money. Faucets are known for attracting large amounts of traffic to websites. And because of that some businesses with cryptocurrency ties have used faucets as a way to get more people familiar with their brand or company.
Faucets can also generate revenue by selling advertising space. This became very difficult in late 2017 as Bitcoin and other cryptocurrencies surged higher, but more recently the faucet model has once again become modestly profitable.
Of course the ad model for faucets has become something of a two-sided sword. The more successful faucets host a lot of ads in order to generate the money necessary to give away all the coins. These might be simple pay-per-impression ads that require nothing more than page loads, or they could be pay-per-click ads that require users to actually click on the ad and visit an advertisers webpage for anywhere from 10 seconds to a full minute.
And to sweeten the pot many faucet sites also have affiliate ads, where they get paid if a user clicks the link and subsequently buys something or even just signs up for something.
The most popular sites can become so overloaded with ads that they are difficult to even use any longer. Unfortunately this is a trade-off that needs to be made if you want to collect free coins.
Auto Faucets and Faucet Rotators
These are two ways that people have found to get around the need for actually visiting faucet sites and clicking links on faucet pages. However, because auto faucets completely automate the process, and faucet rotators partially automate the process, you can’t earn much from them at all.
Example of Crypto Faucet Bot. Source: bitcointalk
An auto faucet is a type of bot that finds its way from site to site, but just visiting the faucet site isn’t the best way to earn. In fact, you might not even earn 1 Satoshi a day by using an automated faucet bot. Currently it takes roughly 6,600 satoshi to equal 1 dollar.
That means at 1 Satoshi per day it would take you roughly 18 years to make $1. Of course it’s also possible that John McAfee is right and Bitcoin will eventually be worth $1 million, so your Satoshi’s would be worth far more in the future than they are now.
There are also faucet rotators that make the process semi-automatic by changing the site you’re on automatically, but you still have to complete the tasks to collect your coins. This is more profitable, but also more time-consuming.
Generally faucet bots are liked by users because it saves them time and effort, but hated by the faucet operators because advertisers won’t pay as much when they know a percentage of the visits to a faucet site are from bots, not humans.
If you’re interested in gaining cryptocurrency for free the faucet is the way to go. Just don’t expect to get rich, or even make enough to fill your gas tank unless the prices of cryptocurrencies increase dramatically. That said, it’s a good way to learn about cryptocurrencies, and is both risk-free and stress free.
The process is mostly safe and secure in that you won’t have to give up your private keys, but you could come across a faucet that never actually pays out. Yes, there are even scams within the cryptocurrency faucets.
If you just want to get some cryptocurrencies and learn more about the whole cryptocurrency concept, then faucets could be perfect for you.
Featured Image via Fotolia