What Exactly Is Crypto Airdrop?
In cryptocurrency, an airdrop is a marketing stunt involving sending free coins or tokens to a wallet address to promote awareness of a new virtual currency. The company sends small amounts of the new virtual currency to active members of the blockchain community, but before they can receive the coins or tokens. They have to complete a small service such as retweeting a post sent by the company issuing the new currency.
Because of the increase of competition within the cryptocurrency space, developers had to come up with a unique way to promote awareness for their new virtual currency and so “airdropping” was launched. Before 2017, it wasn’t considered conventional, getting the tagline of guerrilla marketing within the crypto space, but now it’s grown into a popular marketing tool for any new currencies wanting to expand.
Currency start-up companies usually distribute the new virtual currency and the airdrops are just a small part of a very large marketing campaign to help the company generate buzz, making this one of the most excellent ways to raise awareness.
They will promote airdrops on different cryptocurrency forums or the website of the company issuing the currency. They only send the specific coins or token to current holders of crypto wallets. It will usually be those of Bitcoin and Ethereum.
Different Types of Airdrops
Even though crypto airdrops have been around for some time, over the years, it has been taking on different forms. Let’s look at some of the main airdrops:
- Standard Airdrop: Anyone can receive standard airdrops. This is a small amount of new currency that is sent to a trader’s wallet and would require a small service in return. A service might include signing up for a newsletter.
- Bounty Airdrop: This form of airdrop recipients will be asked to help promote a blockchain project, usually on various social media platforms. Some of the promotion tactics would be to share a post on Facebook or re-tweet something on Twitter to raise awareness.
- Exclusive Airdrops: The name says it all. They reserved this for loyal followers of a particular virtual currency or a blockchain community. Aggregators often run these exclusive airdrops, and it usually comes with no strings attached.
- Holder Airdrop: They give these airdrops to individuals who are already holding a certain token or coin. These can be members from the Ethereum blockchain community who will receive free tokens from a new currency that was created on their specific blockchain.
- Hard Fork Airdrop: This is not your usual airdrop. This airdrop occurs when the developers of a certain token change the protocol code and thus creating a new token. The old version still exists. When this happens, you can also call it a “chain split”. Users who hold the original token will receive the exact newly developed token into their wallets.
Advantages and Disadvantages of Crypto Airdrops
Just like any marketing strategy has its pros and cons, airdrops aren’t any different. Probably one of the most appealing aspects of airdrops is that it’s simple and low-cost advertising. The first step towards success for any cryptocurrency is people need to hear about it first. In this world, few things come close to word-of-mouth advertising. If you time the airdrop just right, you can prompt recipients to educate themselves and go out and self-promote, which can turn into an excellent fundraising opportunity.
Let’s ask, who doesn’t want to see free money in their wallets? For those with small holdings in their wallets, this is a great way to build your wallet portfolio. In most cases, it’s the company issuing the airdrops who will benefit, but it can be a win-win situation if the currency gains popularity and the value rises.
Where it gets tricky is when the distribution of tokens or currency starts, because they have to distribute the right amount of tokens to the right amount of people to build trust in the community. They also don’t want to run out of tokens and then have to buy them back from the recipients. Something else to look out for is when recipients sell off the freebies they received, causing the value to drop significantly.
One of the biggest disadvantages is something we struggled with before cryptocurrency, and that is scams. They’ve just become more sophisticated in later years. Some types of cryptocurrency scams to look out for are the pump-and-dump scheme where they will artificially inflate the currency and sell it off to make a quick profit.
Private key scams are when they trick individuals into providing their private key information. Please never give your private key to ANYONE. And then we have information scams involving actors collecting personal information and selling it off to a third party.
These scams are all around us, but when you know what to look out for, you’ll be safe.
How to Get Crypto Airdrops
Nowadays, it’s quite easy to find airdrops because companies want to promote their currency in the best way possible. The easiest way to go about is to search the internet. There are different cryptocurrency forums you can check out or a lot of the times companies will advertise it on their website. You can also follow various social media channels to see when and where the next airdrop will happen. Some platforms include Reddit, Twitter, and Telegram.
Are Crypto Airdrops Worth It?
In short, yes. It’s a wonderful way for both companies and individuals to gain experience with the new currency. Companies will promote them properly and recipients will see the value grow if they know how to use them correctly.
One risk involved with companies is the number of tokens they send out. If they send out too many, the price can plummet and all that effort would’ve been for nothing, but if they send out too little, it might gain no traction among traders.
For recipients, apart from the fact that getting free tokens is wonderful, especially if you don’t have a lot in your wallet, but it can also be a significant source of income if you know how to recognize the right ones.
Are Crypto Airdrops Safe?
As we mentioned earlier, if you practice caution and do your research, then it will work out in your favour. In doing so, you’ll be able to sidestep all the scams trying to get you. The aim of airdrops is purely promotional, so seeking capital investment is never an option. However, it can gain value in the long term if the new currency rises in popularity. It’s crucial to always keep an eye out to verify the authenticity of the airdrops you want to receive. Some signs to look out for regarding fake airdrops are:
- New posting accounts
- A request to fill in a form on a third-party platform
- Airdrop look-alike
- A suspiciously high airdrop
Always do your research on the project beforehand. See whether it’s legitimate and if it has any chance of becoming successful.
Crypto airdrops are at their core a harmless marketing stunt to spread the word about a new currency. The specific marketing method can benefit both company and recipient in the long run as well as promote the blockchain community. Even though airdrops are mostly small, they turn highly profitable, investing none of your own money.