Faucet
Faucet is a reward system in form of a website or an app, which distributes the reward among the users for completing some task (for example, entering of captcha or any other given in the description).
Bitcoin-faucet is a system, where Satoshis are used as a reward (this is how a one-hundred millionth part of Bitcoin is called). Chronologically, the first faucets appeared for Bitcoins exactly; they were developed by Gavin Andresen, the chief research worker of Bitcoin Foundation in 2010.
Contents
Purpose of Creation
- To make new user acquainted with Bitcoins. The majority of faucets provides new users with information as well as offers them free coins so that they could experiment with a test transaction before investing real money.
- To receive traffic. Faucets are websites with a high traffic, which attracts the possibility to get free money. For this reason, a faucet is an effective way to attract newcomers to the acquaintance with a brand.
- To earn money. To earn real profit even from a popular faucet is not easy, but still real. Today, there are a lot of such websites, which is why the market is very competitive and basically, the earnings go to cover the costs of coins, given to the users and to a hosting. The only way to get profit from a faucet is to add some additional unique and up-to-date content, which will lead more traffic.
Work Principles
An owner of a Bitcoin-faucet uploads Bitcoin to the cryptocurrency wallet of a payment manager integrated into the websites. The payouts for users are given according to the rate / type of a website activity.
The rewards are distributed in various pre-defined time intervals. A typical payout for a transaction makes out less than 1000 Satoshis, although some faucets may give random big rewards. To reduce a reward for mining, faucets usually collect little individual payments in own wallets, in order to form a bigger payment later, which is sent to the user’s Bitcoin address.
In the faucets, the referral system is valid as a rule, where a user receives a reward for each invited user and his activity on the website. At that, the incomes don’t pass up the referrals’ chain to the top, which makes this scheme different from classical “financial pyramids”.
Legal Status
The exact status of Bitcoin-faucets is not clear and may vary depending on the jurisdiction
Risks from the hackers’ side
As the Bitcoin transactions are inconvertible and there are a lot of Bitcoin-faucets, they often become a target for hackers, who steal Bitcoins.