What is Faucet?
A faucet is a simple means for users to earn a small amount of cryptocurrency by completing certain tasks. This can include sharing information on social media, playing games, solving captchas, or watching ads. By completing certain tasks the service offers a small reward payout, often in the form of ETH’s ‘wei’ or BTC ‘satoshi.’
One of the reasons that users choose to engage with faucets is the relatively low bar for entry. Unlike mining or trading, faucets are comparatively simple and require little technological investment or know-how. In fact, many faucet users operate from simple mobile devices.
Faucets offer developers a means of incentivizing users towards their platforms, by offering alt-coins. Alt-coins, being an offhand term for ‘all coins bar Bitcoin’. In the early days, alternative coins needed some extra incentivization to draw in users. Bitcoin itself maintained a faucet reward system, that in its early days, offered a now staggering 5 BTC for the completion of a captcha. Today however BTC faucets offer a far smaller sum of satoshis instead.
Since 2019 however, a steady decline in faucet payouts has been observed. This is likely due to the overall value increase and expansion of the cryptocurrency ecosystem. Likely reducing the need for developers to incentivize users through small coin offerings.
Though faucets still play a role in some parts of the crypto community, offering a means to enter the ecosystem in a small way, as long as the user has the necessary time and patience. In some cases, users operate faucets to gather the small amount of cryptocurrency needed for transactions. Sometimes referred to as getting ‘gas.’ These services are usually quick and convenient paying directly into a user’s wallet.
Cryptocurrency markets, much like any market can have some bad actors. Therefore it is wise to be informed of the various scams that unscrupulous individuals may employ. Faucet Scams are one such activity to keep an eye out for.
‘Faucet Wallets’ are claimed to be a coin wallet service that deposits a small amount of crypto into your account as a reward for usage. However, by depositing crypto or attempting to remove crypto from the ‘wallet’, the wallet simply disappears with the funds. In this sense Faucet Wallets function in a similar fashion to an ‘exit scam,’ but on a fraction of the scale. Qoinpro is the most notable example of a faucet wallet scam.
Another scam was made infamous by ClaimBTC. This scam incentivized users to enter into a gambling coin system. To enter the system an initial offering had to be made by the user, somewhere between 5-25 euro. After making this offering a period would pass, and afterward, users were supposed to have their coins released. Users were incentivized by usage payments into their wallets. However, when attempting to remove one’s coins, the website would simply refuse to payout, or a user may find themselves mysteriously banned.