Trouble may be brewing for some of the leading bitcoin faucet operators, as problems persist with three of the main micro wallets used by sites in this area of the bitcoin ecosystem. The market has been dominated up to now by three different operators – Microwallet.org, Coinbox.me and BitChest.me – which for years have steadily churned out bitcoins to thousands of bitcoin users. However, in recent weeks Bitchest stopped dispensing, and their bitcoin wallet address has gone quiet. Now in the last few days, Microwallet.org put up a notice that there was a bug with the Blockchain.info API, and was offline yesterday, but back up again today with a notice saying that withdrawals will be processed in the next 24 hours. So can these issues be overcome, or is writing on the wall for these sites?
I have been looking into faucets for the last few weeks for some personal research, and have several accounts on these sites over the threshold. I can confirm that two of the three, MicroWallet and BitChest, indeed have stopped dispensing.
Dismissed by many for the tiny amounts of bitcoin they give to end users, these faucets still have served an important entry gateway into bitcoin for a number of years now, enabling people to get their hands on their first bitcoin. I think the first thing that people find out is that there are easier ways to get their first bitcoins. But as many people are exposed to new brands and service, whether good, bad or shady, a number of these users will go on to buy or trade bitcoins on exchanges, buy mining hardware to generate bitcoin themselves. or invest in cloud mining services.
Users visit the sites, usually plastered with advertising, and fill in a captcha and their bitcoin wallet address. A small amount (anything from 10-500 satoshi) is then transferred into an associated micro wallet, and the visitor needs to wait for a specified cool-down period from five to 240 minutes before being able to repeat the process. People then can systematically do this across several sites using the same micro wallet, which builds up. Once they pass the bitcoin network’s 5430 minimum payment threshold , a payment is queued to be sent to a large batch of users on a set frequency.
The faucet business model is relatively straightforward. They start with an initial amount of bitcoin to get them going, and then they are monetised either through affiliate links to bitcoin merchants, advertising from bitcoin ad networks or Google advertising, or donations from users. Faucets also cross promote a range of similar sites on different domain names, and then offer users a percentage of any referral they bring in. As long as these numbers and volumes are maintained, it should cover itself, but it is also easy to knock the metrics out of line, with a drop in traffic, large fluctuations in bitcoin’s price, or operators losing interest.
The market has also moved on somewhat, with a shift away from sites that look like they were designed off an old geocities template, and more professional sites such as Moonbit.co.in and BitcoinZebra.com offering a different take on the concept – usually with much larger payouts into their own wallet. A number of dice gambling sites like 999dice.com and freebitco.in offer a faucet as a way to be drawn into their games with the intention of getting people to make a lodgement and gamble it on the site.
So we’ll have to wait and see what happens with these micro wallets; will they start working again, or will they shut down overnight without warning? Either way, this area of the bitcoin ecosystem is going through a shakeup which means opportunities for new entrants into the market. Have you used a bitcoin faucet, and did it lead you into spending more in bitcoin or not? Let us know in the comments box!
A bitcoin enthusiast from Dublin, Ireland who runs the Bitcoin Marketing Team. Connect with him at @DublinJammers or on LinkedIn