Finance:Bitcoin faucet
A bitcoin faucet is a reward system, in the form of a website or app, that dispenses rewards in the form of a satoshi, which is a hundredth of a millionth BTC, for visitors to claim in exchange for completing a captcha or task as described by the website. There are also faucets that dispense alternative cryptocurrencies.
The first bitcoin faucet was called The Bitcoin Faucet and was developed by Gavin Andresen in 2010.[1] It originally gave out 5 bitcoins per person.
Operation
Rewards are dispensed at various predetermined intervals of time as rewards for completing simple tasks such as captcha completion and as prizes from simple games. Faucets usually give fractions of a bitcoin, but the amount will typically fluctuate according to the value of bitcoin. Some faucets also have random larger rewards. To reduce mining fees, faucets normally save up these small individual payments in their own ledgers, which then add up to make a larger payment that is sent to a user's bitcoin address.[2]
As bitcoin transactions are irreversible and there are many faucets, they have become targets for hackers stealing the bitcoins.[3]
Referral system
It is typical for faucets to have a referral system, where existing users referring new ones are rewarded with a pro rata portion of new users' earnings from the faucet. Unlike illegal pyramid schemes, earnings do not percolate to the top in the chain of referrals. The exact legal status of bitcoin faucets is unclear and can vary by jurisdiction, refer to legality of bitcoin by country.
Revenue model
The setting up of a Bitcoin faucet involves integrating a payments processor/manager. The owner of the faucet loads some Bitcoin into this payments manager's cryptocurrency wallet. The payout for visitors are given out according to the sites rates/kind of operation.
Advertisements are the main income source of Bitcoin faucets. Faucets try to get traffic from users by offering free Bitcoin as an incentive. Some ad networks also pay directly in Bitcoin. This means that faucets often have a low profit margin. Some faucets also make money by mining altcoins in the background, using the user's CPU.
See also
- Amazon Mechanical Turk
- Live banner
References
- ↑ Lee, Timothy B. (2014-01-03). "Five years of Bitcoin in one post" (in en-US). The Washington Post. ISSN 0190-8286. https://www.washingtonpost.com/news/the-switch/wp/2014/01/03/five-years-of-bitcoin-in-one-post/.
- ↑ Jason Mick (12 June 2011). "Cracking the Bitcoin: Digging Into a $131M USD Virtual Currency". Daily Tech. http://www.dailytech.com/Cracking+the+Bitcoin+Digging+Into+a+131M+USD+Virtual+Currency/article21878.htm. Retrieved 30 December 2014.
- ↑ Andresen, Gavin (1 March 2012). "Bitcoin Faucet Hacked". http://gavintech.blogspot.fi/2012/03/bitcoin-faucet-hacked.html. Retrieved 30 December 2015.
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