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Named after real faucets, bitcoin faucets dispense cryptocurrencies instead of water.

Bitcoin faucet is a World Wide Web website that gives out "free" bitcoins (BTC) in exchange for doing a simple task, such as clicking on an advert, solving a CAPTCHA, or viewing a webpage for a certain amount of time.[1] There are also faucets that dispense alternative cryptocurrencies.

Operation

Faucets usually give tiny amounts that typically fluctuate according to the value of bitcoin. Typical payout per transaction is less than 1000 satoshi,[note 1] although many faucets have random larger rewards. Normally faucet saves up these small individual payments in its own ledger, and they add up to make a larger payment that is sent to your bitcoin address. This is to reduce mining fees.[2] Some faucets use immediate off-blockchain transactions,[3] which has no fees.[4]

Bitcoin faucet rotators can 'rotate' through a large list of faucets by clicking a button on a single websites, meaning more sites can be visited than entering the URL of site after site. The website earns money through a referral system for each website visited. Faucet rotators can also prioritize faucets by their level of average payout and will only visit sites if the time limit in between payouts has been reached.

The business model of bitcoin faucets is to get advertisement revenue from banner ads and distribute only portion of that money to users. A time limit is imposed between payouts to stop bots, human CAPTCHA solvers in third world countries, or avid users performing repeated withdrawals.

As bitcoin transactions are irreversible and there are many faucets, they have become targets for hackers stealing the bitcoins.[5]

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.

See also

Notes

  1. Named after Satoshi Nakamoto, satoshi is the smallest unit of bitcoin. 1 satoshi equals 10−8 BTC.

References

  1. "Get Free Bitcoins with 51 Website Faucets that Really Pay". Retrieved 30 December 2014.Page Module:Citation/CS1/styles.css has no content.
  2. Jason Mick (12 June 2011). "Cracking the Bitcoin: Digging Into a $131M USD Virtual Currency". Daily Tech. Retrieved 30 December 2014.Page Module:Citation/CS1/styles.css has no content.
  3. "Bitcoin Zebra Faucet". Bitcoin Zebra Faucet. Retrieved 1st Jan 2015 - temporary promotion. Check date values in: |accessdate= (help)Page Module:Citation/CS1/styles.css has no content.
  4. "Off-Chain Transactions". Off-Chain Transactions. Bitcoin Wiki. 2 August 2014, at 02:49. Retrieved 2015-01-01. Check date values in: |date= (help)Page Module:Citation/CS1/styles.css has no content.
  5. http://gavintech.blogspot.fi/2012/03/bitcoin-faucet-hacked.html