A cryptocurrency reward system usually on a website or app, that rewards users for completing certain tasks.
What Is a Faucet?
A crypto faucet is a reward system which allows users to earn free, usually small, rewards in crypto for completing certain tasks. The tasks typically involve viewing ads or completing captcha tasks. It is considered an effortless way to earn crypto assets which doesn’t require any expertise unlike cryptocurrency trading.
Bitcoin faucets are unsurprisingly one of the most popular forms of faucets. The first faucet, called “The Bitcoin Faucet,” was developed in 2010 by Gavin Andresen, a software developer known for his contributions to Bitcoin. It gave out five whole BTC for completing small tasks like captcha completion or as rewards to simple games.
After cryptocurrency prices rose in 2019, payouts from faucets have become increasingly low. Faucets tied to the likes of Ethereum, Dogecoin and Litecoin later emerged to incentivize purchases of these altcoins, which are cryptocurrencies created after Bitcoin. Nowadays, faucets are typically used to distribute gas tokens in testnets or new blockchains, so as to allow users to interact with the applications.
Most faucet rewards are paid directly to a user’s wallet or whichever third-party wallet is being used. Faucets should not be mistaken with airdrops and bounties, which are also other ways of achieving cryptocurrency rewards. Airdrops are usually distributed by new projects seeking to incentivize or reward early adopters, while bounties are rewards given to anyone who discovers bugs or vulnerabilities in the project’s code, sometimes known as white-hat hackers.