A Bitcoin faucet is a way to get free cryptocurrency. Of course, nothing is really free, and faucet users have to do something to get rewards from a faucet.
Before learning more about crypto faucets, it’s important to take note that some people have used Bitcoin faucets to create scams in the past. There could be some crypto faucet sites that infect a user’s device with malware, spyware, or ransomware. Users choose to engage with crypto faucets at their own risk.
What Are Bitcoin Faucets?
A Bitcoin faucet is a website or app that gives out tiny amounts of cryptocurrency in exchange for completing simple tasks. The name “faucet” comes from the fact that the rewards are very small, like drops of water dripping from a faucet.
Bitcoin faucets send small amounts of free or earned Satoshis (the smallest unit of Bitcoin) to a user’s wallet. To claim these rewards, users typically have to perform a task such as:
• Watching product videos
• Viewing or clicking on advertisements
• Completing a Captcha
• Solving a puzzle
• Playing a game
As payment for these tasks, users could receive a single Satoshi, which is one millionth of one Bitcoin (0.00000001 BTC). At the time of writing, one Satoshi was equivalent to $0.0003, or three hundredths of one cent.
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How Do Bitcoin Faucets Work?
Most Bitcoin faucets are easy to use. Sometimes it can be as simple as entering a public key address for your Bitcoin wallet, clicking a few buttons, and receiving the coins. In general, the more complex the tasks required, the higher the rewards. Keep in mind that some faucets are safe and legal, but they give very small rewards and it is unlikely that users will get rich off of them.
Faucets often have a web-hosted wallet that stores coins for users up until a certain point. To avoid transaction fees eating up most or all of the rewards, most Bitcoin faucets have a minimum threshold that users must reach before they can withdraw the coins to their own wallet.
What is the Purpose of Bitcoin Faucets?
During the first few years after the creation of Bitcoin 2009, few had heard of the idea of virtual currency. And those who had couldn’t do much with their coins, as business did not accept bitcoin for payment, and there were no opportunities for trading because the crypto exchanges of today didn’t exist yet.
Gavin Andresen, an early Bitcoin adopter, believed in the future of Bitcoin and devised a way for more people to learn about cryptocurrency. He offered free Bitcoins in exchange for completing Captchas.
In 2010, the first Bitcoin faucet ever created paid out 5 BTC in exchange for the simple task of clicking images. This was at a time when one Bitcoin was worth less than a penny. Today, 5 BTC would be worth about $150,000.
As crypto and crypto faucets became more popular, the rewards fell to the smallest denominations possible. Faucets became an integral part of cryptocurrency history.
Pros and Cons of Bitcoin Faucets
Bitcoin faucets have both benefits and drawbacks that investors should understand.
|Free crypto||Some faucets could be scams|
|Easy way to get started learning about crypto||Small rewards|
|Anyone can use faucets||Mindless tasks required|
Pros of Bitcoin Faucets
• The biggest pro of crypto faucets might be the free crypto. There aren’t many other ways to get crypto handed to you. Crypto airdrops also involve users receiving free crypto, but those are usually distributed to select users based on certain eligibility requirements.
• Faucets are an easy way to get started with Bitcoin or other cryptocurrencies. There’s no real investment required beyond getting a crypto wallet and doing the task associated with the faucet in question.
• Faucets don’t require much knowledge or know-how to get started. Anyone can use them. You don’t have to know how to trade crypto to use a faucet.
Cons of Bitcoin Faucets
• The amount of crypto earned is very small. As mentioned earlier, the reward could be as little as one Satoshi. At the time of writing, one penny is equivalent to about 33 Satoshis.
• The tasks that a Bitcoin faucet will require can quickly get monotonous. How long will someone be willing to sit there and repeatedly complete a Captcha? Probably not long enough to accrue earnings worth more than a few cents.
• The risks of cryptocurrency in general also apply to faucets. Some can be scams, phishing attempts, or ways to steal a user’s funds or identity. Some faucets could infect users with malware. The lure of free money can be an effective way for hackers to compromise the devices or identity of potential users. The website or app might be phishing for information or download malware to a user’s device after having them click a link or download a file. There are a few signs that could be red flags that a crypto faucet is a scam:
◦The rewards are too good to be true. If the rewards seem significantly higher than other faucet rewards, they may not be legitimate.
◦ You’ve received an unsolicited offer. If you’ve received a faucet offer via email or message without asking for it, it could be from a scammer.
◦ Error-heavy messages. Multiple grammatical errors and misspellings could indicate a problem.
Other Types of Crypto Faucets
While it all began with a Bitcoin faucet many years ago, today there are crypto faucets for all types of different cryptocurrencies. Some of the most popular include Litecoin faucets, Ethereum faucets, and Dogecoin faucets.
A Litecoin faucet functions in the same manner as a Bitcoin faucet. The only difference is that the faucet distributes Litecoin (LTC) rather than Bitcoin (BTC).
To use Litecoin faucets, users will have to first set up a Litecoin wallet. Then it’s just a matter of choosing the highest-paying Litecoin faucet. Some faucets could pay up to 1,000 litoshis (the smallest units of Litecoin), or about one tenth of a penny at current prices.
An Ethereum faucet is one that distributes ETH, the native token of the Ethereum network.
Ethereum faucets, like some other faucets, also have referral bonuses. Users who refer their friends could get an extra faucet drip without having to do anything more.
When trying to withdraw funds, users could run into problems, however. The Ethereum network tends to have very high transaction fees, known as GAS fees. So, to send $2 worth of ETH to another wallet could easily cost more than the transaction itself. If that turns out to be the case, then moving the funds will prove impossible.
Dogecoin faucets have been popular since the meme cryptocurrency was first invented back in 2014. These faucets distribute Dogecoin (DOGE). Because DOGE has such a low value, larger portions of coins can come out of faucets. When one DOGE was worth a fraction of a penny, faucets would distribute 1 or 5 DOGE at a time.
Today’s Dogecoin faucets distribute anywhere from 0.1 to 1 DOGE at a time. With 1 DOGE being worth about $0.18 at the time of writing, these might be the most lucrative faucets at this point in time.
The Future of Crypto Faucets
The future of crypto faucets probably looks a lot like the past. These are basically fun apps for people who are new to crypto. It gives individuals a way to get started learning how to interact with the cryptocurrency ecosystem without having to make an initial investment. No one keeps clicking on a faucet all day hoping to cash in on big rewards.
Then again, if the crypto provided by a faucet sees big price gains, then over time, it’s possible that the small amounts of crypto could add up to something for those that HODL. But in terms of today’s value, the typical crypto faucet pays out a tiny fraction of a penny each time, and there are limits on the number of payouts a user can receive in a given timeframe.
A Bitcoin faucet or any other crypto faucet isn’t a way to make money with cryptocurrency. Faucets are more like free games that can give new users their first foray into the crypto world. It could take many months of repeatedly using faucets to accumulate even one dollar’s worth of rewards. Crypto faucets take advantage of the divisibility of cryptocurrencies, or their ability to be divided into many smaller units. This feature is part of what makes digital assets unique.
There are easier and more effective ways to get started investing in cryptocurrency. One of them is to open an account on the SoFi Invest® online brokerage platform. Beginners and experienced investors alike can use the Invest platform to buy and sell Bitcoin and several other top cryptocurrencies.
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