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Today’s retrospective will be a trauma-bonding experience for anyone who was too busy playing Plants vs. Zombies or StarCraft 2 to stack sats in 2010.
At this point 15 years ago, the premier Bitcoin faucet was in full swing.
Gavin Andresen, one of Satoshi’s first collaborators, had only been a member of Bitcointalk for two weeks when he announced he would give away free bitcoin.
“For my first Bitcoin coding project, I decided to do something that sounds really dumb: I created a web site that gives away Bitcoins,” he wrote.
Anyone who entered a Bitcoin address and solved a captcha would soon soon receive 5 BTC, worth about five cents apiece at the time. Today, 5 BTC would trade for more than half a million dollars.
Gavin filled the faucet with 1,100 of his own bitcoin to start, or about $55 in US dollar terms, and said he would add more once he was sure the system worked as intended. Those same coins would fetch nearly $118 million at current prices.
“Why? Because I want the Bitcoin project to succeed, and I think it is more likely to be a success if people can get a handful of coins to try it out. It can be frustrating to wait until your node generates some coins (and that will get more frustrating in the future), and buying Bitcoins is still a little bit clunky.”
At first, the faucet was restricted to dishing out 5 BTC per IP address, leading one user to pull out 50 BTC in minutes using Tor, which can quickly generate new IP addresses within the browser itself. In good faith, that user sent the coins back to the faucet.
“He’s giving it away, it’s an honor system, so don’t take more than you need,” wrote Laszlo Hanycez.
Gavin then made it so each bitcoin address could only ever receive one faucet donation “to make it a teeny-tiny bit harder to cheat. I don’t want to blacklist anybody coming from Tor, though — I think a lot of people using Tor will also be interested in Bitcoin.” He also tipped one user 50 BTC ($2.50 then, $5.4 million now) for submitting a bug report for a security flaw.
The faucet was active for a little under two years, right up until March 2012. Bitcoin’s price had exploded up to 500x all the while, to nearly $30 at most, leading Gavin to scale payouts down over time.
When the faucet had run dry (accelerated by a hack on the Linode cloud server that was underpinning the faucet and a number of other Bitcoin services), bitcoin’s US dollar exchange rate had settled at about $5, and each user was receiving 0.0015 BTC, or less than a penny.
It’s difficult to say exactly how much bitcoin the faucet distributed overall. Part of the intended appeal was that anyone could donate coins for the benefit of the community, and often recipients would simply return the coins they received back to the faucet’s address. Giving and receiving coins had clearly become a ceremony for some. The total volume of the faucet’s address amounted to nearly 19,716 BTC ($2.1 billion at current prices).
Realistically, actual distributions likely amounted to a few thousand coins at best, at least by my very surface-level count.
Is there a moral here? Something hokey might do, like “giving is good” or “pay it forward.” I’m just not sure any of that eases the pain of being 15 years too late for a free bitcoin fortune.
In that case, there’s always Charlie Shrem’s faucet revival, if it ever attracts any coins.
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