The ever-growing trend of “tap-to-earn” has raised eyebrows in recent years for not quite delivering on the lofty “earning” promises they make. Yet, with all the cynicism around such crypto projects, people keep returning for more.
The “sunk cost fallacy” seems to be in play—a psychological conundrum in which people commit themselves to something despite all evidence suggesting that their expended time, effort, and even money will never be meaningfully returned to them.
The concept of “tap-to-earn” can be traced back to the very beginnings of Bitcoin’s (BTC) journey, when—unbelievably—websites were giving away BTC for free.
All you had to do was find one of these “Bitcoin Faucets,” prove you weren’t a robot by solving the captcha, and just like that, you received free BTC tokens. At the time, BTC was barely on the world’s radar, and no one had any idea that it would ever become one of the world’s top-performing assets.
There were no lofty promises, no guarantees it would improve your financial situation, just an offer to receive free crypto for a minute of your time. Fast-forward to today, and there are many Web3 projects vying for your attention.
In hindsight, we can look back at Bitcoin Faucets as one of the greatest missed opportunities of a lifetime because we can see now that it would have made us very rich. With crypto being awash with tales of rags to riches, the “tap-to-crypto” sector couldn’t be any more attractive to users of every economic background.
But are these projects just now mining their users’ attention by dangling the carrot of returns far enough ahead to keep them coming back for more?
Telegram’s latest run of tap-to-earn titles, such as Hamster Kombat and Catizen, drew hundreds of players to their “free” games, essentially competitions to earn airdrop points.
Users logged into the game every day for months to earn in-game points, complete various tasks, and work their way toward a reward of unknown value in return for their time.
Read More: Pi Network: Why Your Coins May Be Worthless
However, it’s not all fun and games. Looking at the Pi Network, a project where users “tap-to-mine” through their mobile phones to earn PI tokens, CCN’s research suggests that the users might be the ones “mined.”
Since 2019, the network has reportedly drawn millions of users who simply confirm they aren’t robots by tapping a button in the Pi Network app. This is supposedly “mining” and, therefore, securing the network, but there’s little to no evidence that this is even happening.
The network has around 60 million users. 12 million are know-your-customer (KYC) verified, and this is extremely valuable for data scrapers and advertisers. Pi Network’s data policy collects users’ personal and identity information, app usage data, and advertising-related data. This includes accessing location history, log information, and the user’s contacts.
The PI token is worth around $34, is barely usable within the network’s limited mainnet, and isn’t publicly tradeable on any exchange. One exchange offers IOU contracts, but they’re not actually PI tokens. In this case, the tap-to-crypto offering remains completely speculative.
But $34 is a juicy carrot for the network’s long-time tap-to-mine users, despite growing concerns that the Pi Network is a data harvesting scheme. So why would they stop now?
Telegram’s tap-to-earn run is potentially just the latest iteration of the sunk cost fallacy in crypto.
Both Hamster Kombat and Catizen were met with criticism following their airdrop rollouts, which left players feeling cheated out of the time and money they had put into the game.
However, despite the distinctly negative press these titles have received, they are still recording millions of daily users.
In fact, these games are already preparing for another airdrop rollout, with even more in-game features, more ecosystem developments, and so on, with no end in sight.
If users could not resist the low-effort, unknown/low-reward offerings made when these games launched months ago, how could they possibly exit after investing their time or money? Troublingly, they may struggle to find any way out of tap-to-crypto’s sunk cost loop.