If you’ve ever been to a public event, attended a concert or otherwise been in a large group of people, chances are good that you’ve seen some sort of “airdrops”. Maybe it was a promotional t-shirt being tossed into the crowd, or some other kind of free swag being given to people as they walked by.
If you’re in crypto, you may have heard about something called an “airdrop”, but if you haven’t, it may sound like nothing more than the word above. If so, we’re here to help. In this article, we’ll talk about what cryptocurrency airdrops are, whether or not they are worth your time, and how to get them for yourself.
There is an old saying in the financial markets, “There is no such thing as a free lunch.” However, in the world of cryptocurrency and blockchain technology, there really is such thing as a free lunch — or at least a free token.
An airdrop for a cryptocurrency is a procedure of distributing tokens by awarding them to existing holders of a particular blockchain currency, such as Bitcoin or Ethereum.
The goal of an airdrop is to bootstrap a new altcoin by spreading awareness about it in the cryptocurrency community. As an incentive to adopt the new coin, existing owners of other cryptocurrencies are rewarded with free coins for performing simple tasks like posting on social media or joining an online group.
Crypto projects often airdrops token to their communities in order to drive interest and adoption.
An airdrop is when a blockchain project distributes free tokens or coins to the crypto community. The digital currency can be distributed to anyone who holds an existing compatible wallet (typically Bitcoin or Ethereum).
In most cases, the airdrop will require you to perform some simple social media tasks in order to qualify for the free coins, such as retweeting a post or joining a Telegram group.
Airdrops are a method that blockchain projects use to distribute their native tokens to users of other blockchains, typically for free. The widespread use of airdrops can be traced back to late 2017, when the cryptocurrency community was flooded with new projects, many of which sought to raise funds through initial coin offerings (ICOs).
As the ICO hype faded and many crypto startups failed to deliver on their promises — or even build fully functional products — some projects pivoted toward an airdrop approach to encourage adoption by offering free tokens to their communities. Today, an airdrop is commonly seen as a form of marketing in the crypto space. By distributing free tokens, companies aim to increase awareness about their projects on a large scale.
The term “airdrop” stems from a military strategy where supplies are dropped by aircraft in areas that are not easily accessible by ground vehicles. In this context, it refers to digital assets being distributed freely or at little cost to the recipients.
There are a number of reasons why a cryptocurrency project may choose to airdrop tokens. It could be that the project is new and looking for ways to build awareness of its existence. It could be that the team wants more people to hold its token and increase liquidity on exchanges. It could also be that the project has updated its blockchain in some way or completed a successful hard fork.
Whatever the reason, airdrops can put free money in your pocket, assuming you’re willing to do a little work. The most common way to participate in an airdrop is by holding another cryptocurrency in your wallet, but there are other criteria you’ll need to meet before you can receive your free tokens. Some projects require that you share their message on Twitter, “like” them on Facebook or join their Telegram group. Others require that you do all of these things and more.
Airdrops are when a blockchain project distributes free tokens or coins to the cryptocurrency community.
Airdrops are primarily implemented as a way of gaining attention and new followers, resulting in a larger user-base and a wider disbursement of coins. There are different types of airdrops:
Token/coin holders get free tokens/coins in proportion to their current holdings. This is most often used by new blockchain projects that give away their tokens to users holding bitcoin or ethereum. These projects hope that these users will become investors in their product once it hits the market.
Social media bounty hunters get tokens/coins for completing tasks (for example, posting on Twitter or Bitcointalk. These tasks tend to be easier than ICO bounty programs because there is no ICO involved. Some blockchain projects just want to promote themselves and distribute their tokens with as little investment as possible.
Free coin/token giveaways on exchanges where people who have accounts can get free coins/tokens for doing nothing at all but having an account with them. For example, Binance has been known to do these from time to time, usually when they are adding a new coin or token on their exchange. Non-profit organizations like Giveth distribute tokens. Airdrops are commonly issued for one of four reasons:
- To introduce new coins or tokens into circulation
- To drive adoption and engagement
- To reward holders for loyalty
- To encourage investors to trade on an exchange
Why do ICOs give out free crypto?
Advertising and awareness is the main reason why ICOs will choose to distribute their coin for free. It’s essentially an advertising strategy that has proven to be very effective. The marketing technique behind this is called viral marketing whereby you get other people to spread your message and in exchange you give them something of value (in this case free tokens).
Airdrops can take various forms:
1) A hard fork, which distributes an equal amount of new coins to all coin holders
2) A snapshot distribution, which distributes an equal amount of new coins to all coin holders at a specific time and 3) A social media bounty program where users reward participants for taking specific actions (e.g., sharing a link on Twitter).
Advantages and Disadvantages of Cryptocurrency Airdrops
- You do not need to spend any money or use your computing power for mining cryptocurrencies.
- You can generate “passive income” by holding the tokens until they become tradable on various exchanges (which may take months).
- There is no risk involved because you do not have to make any investment with your own money.
- You can potentially gain free coins.
- It provides free publicity because there is media coverage for each cryptocurrency airdrop conducted. This attracts more investors’ attention towards
For the ICO owners:
- Increase brand awareness and gain exposure
- Create early adopters and advocates for your project
- Grow your user base as you gain more followers on social media and email subscribers
The disadvantages of cryptocurrency airdrops include:
Airdrops are not without risks. The primary concern is that airdropped coins often do not have much value as they have no working product or use case yet. Some projects can also be scams that only want your personal information and wallet details so they can steal your funds later on. Other disadvantages include:
- Waste of time: you must jump through hoops to qualify for an airdrop. The value of the token or coin may be worthless and likely will over time. There is no guarantee you will receive the tokens or coins if you participate in an airdrop. Some people believe airdrops create spam on social media channels. Some people believe that airdrops only benefit scammers who are looking for information from participants.
- Hefty fees: To claim an airdrop, you must first pay fees to send Bitcoin or Ethereum from your wallet (unless your wallet’s developer covers these costs). When you sign up for an airdrop, you may also need to pay fees to join groups on social media or Google Drive. Receiving free tokens doesn’t always make up for the cost of claiming them.
- Scams: Some airdrops are downright fraudulent and designed purely to steal your information or private keys. Always follow best practices before participating in any crypto giveaway — look for red flags like asking for too much personal information, offering too many tokens, and requesting access to your private wallet keys.
Cryptocurrency airdrops help crypto ventures stand out and acquire traction in the cryptocurrency sector. It might also be a nice approach for crypto aficionados to diversify their portfolio with new coins. However, there are likely to be more fraudulent airdrops than legal ones, so proceed with caution and conduct your own investigation before partaking.