Faucets and Free coins...

Strolling around the web you find tons of sites that promise you free coins of whatever type. These types of services are called faucets. These faucets pages usually are set up to give away tiny amounts of coins in exchange for tiny tasks.

The earnings are comparable to trying to extinguish a burning house while having a dripping faucets as the only source for water.
This said, whoever makes a noteworthy amount of coins by using a faucet service, could probably easily multiply her income by putting the same effort into an ordinary paid activity.

So what is the purpose of faucets?

If someone comes up with a new page to manage cryptocurrencies they are always facing the question of how to draw people to their brand new services. A basic concept for this is to open up a bunch of faucet pages. They will offer you to get free coins for clicking on certain links. But in order to be able to acquire and withdraw your coins you will have to open an account at the cryptocurrency management page in question.

The same concept works if you are looking to promote a brand new cryptocurrency. Opening some faucets that give away free coins of the new currency, will most likely draw the attention of some crypto gold diggers that will start to gather some of the coins.

Now the great 'trick' with this kind of set up is, that the operators of these pages set a minimum amount that needs to be acquired before anything can be withdrawn.

The rest is statistics. As most people will never get to that minimum amount. It is pretty easy to balance the numbers in order to make this profitable for the operators.

Given a new user (of the service or the coin) has an average business value (for the operators, i.e. the company that runs the stuff) of A.
And out of 1000 users X manage to acquire an amount of B bigger than the minimum limit L.
The the limit L has to be chosen in a way that 1000xA > X*B, meaning L is set to a value that the number X is small enough.

Knowing the numbers makes it possible to run the whole system with profit.

Additionally the operators will most likely receive some rewards themselves for promoting all the links that the visitors need to click, thus it´s actually the visitors working for them for very little payout.

A slightly different variation of this scheme is implemented on those faucet pages that come as gambling pages. Again here the basic principle comes down to offer free coins, make it possible to increase the user´s probability to win by betting more coins and make sure the statistics are on the operator´s side by choosing the right minimum withdrawable amount.

As long as more money is bet than withdrawn this scheme works profitable.

Of course legitimate faucet pages need to be solvent (in terms of the according cryptocurrency) to cover whatever they distribute among their users. But for now I doubt that this is the case. As applicable law lags behind the technical race on blockchain based ideas, chances are many of those pages only cover the amount that is withdrawn by the users. And as briefly described above this can be controlled pretty well.

So this is a matter of common sense to decide whether any of the offered services is trustworthy.

faucethub.io offers quite a list of available faucets.

99bitcoins.com give a short overview on how to set up faucets.

cryptoworld.io have an list of rated faucets.

Whereas I do not receive anything for posting the above links. I was promised to get $10 worth of bitcoins by posting the following link

Earn free bitcoin

I will keep you updated whether this worked ;)