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What Is Crypto Airdrop and How Does It Work?

Crypto airdrop

Crypto airdrop involves the free distribution of new coins or tokens to users who own a certain coin. In fact, this is a common marketing campaign organized by young crypto startups or large companies to promote a completely new coin that is not yet on the exchanges, and so far only a pre-sale of tokens is being carried out. The purpose of such a campaign is to create hype and gain public attention, increase the total turnover of the cryptocurrency, as well as stimulate token trading and community development.

How Does Airdrop Crypto Work?

In addition to boosting user interest in the crypto space, the airdrop also adds value to the token at an early stage so that holders can quickly start trading it. Therefore, startups adopt airdrop tactics to improve the standing of their project in the crypto space.

When developers are ready to start the giveaway, they write promotional posts about the upcoming coin on their project website or on third-party websites. The message is then posted on social media so that crypto enthusiasts can find out about the emergence of a new currency.

When it comes time to launch a crypto, developers send multiple tokens to users of a particular blockchain platform.

What are Airdrop Crypto used for?

Airdrops are used by startups for advertising purposes to promote their new crypto project in a short time and attract more investor capital. When a startup enters the market, it needs to gain some fame before users start trading it. People who receive free tokens become fans of the project, and its popularity begins to grow. Crypto projects also use airdrops to reward their users.

Airdrop cryptocurrencies allow users to make a profit for the minimum number of actions they take. The received tokens can be sold immediately after they are listed on the exchange, they can be exchanged or left for long-term storage. If governance tokens are airdropped, their holders receive voting rights that they can use to influence important decisions regarding the project.

Advantages and Disadvantages of Crypto Airdrop

Here are some of the obvious crypto airdrop benefits:

  • Getting free cryptocurrency. A small amount of cryptocurrency can lead to profits if the value of the asset rises.
  • Minimum effort required. To participate in the airdrop, users do not need to do anything at all (in the case of automatic distributions) or perform just a couple of simple actions (in the case of promotional ones).

However, airdrops are not without some awfully significant drawbacks:

  • The need for an account that has already established a successful following in social networks. When distributing free tokens, developers sometimes use the proportionality method: tokens are awarded in proportion to the number of friends or subscribers. Therefore, the owner of an account with 500,000 friends can get a fairly good profit, while a user with accounts with only 500 subscribers will receive “crumbs from the master’s table.”
  • A large number of crypto projects that failed. Not all cryptocurrencies that have conducted an ICO are listed on the exchanges or become successful.
  • Too many scam airdrops. Often giveaways of free tokens are created with the aim of cashing in on gullible and inexperienced users. Participants are asked to provide personal information, which is then used to break into their wallets, spread viruses and steal money from users’ accounts.

What are different types of Crypto Airdrops?

Airdrops can be achieved in a variety of ways. The most common one is to deposit free tokens into the user’s wallet for completing various tasks, such as registering an email address or posting on social networks. Here are some types of airdrops:

Bounty Airdrop

As part of the bounty, users are required to complete a specific task in exchange for free coins. For example, tweet about a new project or post on Instagram and tag your friends.

This type of airdrop is used to create buzz around a project: the more people who know about it, the better for the developers.

Standard Airdrop

This type of airdrop requires users to subscribe to a newsletter or register on the project website in exchange for tokens.

The purpose of using this type of airdrop is to attract new users.

Exclusive Airdrop

These airdrops are designed exclusively for certain user groups, such as loyal users of a particular community, website or project.

The purpose of using this type of airdrop is to reward and retain loyal users.

Holder Airdrop

Holder airdrop is when users who already have certain tokens in their crypto wallets get new ones.

This type of airdrop is meant to reward holders of a particular token or coin for their loyalty. Therefore, an airdrop participant is required to hold a certain amount of tokens or coins during the event.

Hard Fork Airdrop?

Some define another type of airdrop – hard fork airdrop. However, it is different from a regular airdrop. Since it is not a way to advertise a new crypto, but the result of a new branch of an existing crypto using the same base code. As a result of the fork, all holders receive an amount of crypto in direct proportion to what they had in their wallets.

Suppose token X is the cryptocurrency of blockchain A. When it is hard forked, token Y is created in the same blockchain. After such a hard fork, the owners of token X will receive an equal amount of token Y.

A fairly well-known example of such a fork is Bitcoin Cash (BCH). The Bitcoin blockchain hard fork took place in 2017, and users who already had Bitcoin received an equal amount of coins in their wallets.

An airdrop occurs when a new crypto token is deposited directly into users’ wallets. If the virtual currency forks in two, an airdrop can be used to send the new cryptocurrency directly to users’ wallets.

How do you get your Crypto Airdrop?

 In order for you to receive your virtual coins, you need to fulfill a number of conditions. And, of course, you must have a digital wallet. The airdrop is taking place on various platforms, but most of the new assets are ERC20 tokens. MyEtherWallet is the best for them. Create an Ethereum wallet and specify its address when participating in the Airdrop of altcoins created on Ethereum.

You can earn money by attracting new participants to the airdrops of crypto-currencies that distribute tokens for free. Everyone must be registered on social networks, a BitcoinTalk account and a Telegram page may also be required. 

Airdrop rules in different blockchain networks may differ somewhat, but in general, the scheme is identical. You collect tokens for about an hour a week and after a certain time they come to your account. Most often, you need to enter the forum and leave your comment there, as well as subscribe to Telegram and other social networks. Coins will not be transferred to you immediately, but after the completion of the ICO. After that, you still need to wait for the release of this cryptocurrency on the exchange, which, frankly, does not always happen. But it happens that users misjudge the prospects of a new project and rush to sell the tokens received in the Airdrop as soon as they appear on the trading floors, and then they rise sharply in price.

FAQ

How to get airdrop crypto?

In order to participate in airdrop crypto, certain conditions must be met. Usually you need to own a certain asset or amount in your crypto wallet. Also, some projects may require you to complete simple tasks, such as writing a post about a forthcoming crypto project.

Can airdrops make you rich?

The probability of actually getting rich on an airdrop is extremely small. To earn decent money, you will need to register for dozens or hundreds of airdrop events. It will take a lot of time to meet the conditions, and there is no guarantee that most of these projects will “explode”.

Is crypto airdrop safe?

Free tokens are not safe, as they are often used by scammers who want to cash in on users’ trust. But if you follow the safety rules by participating only in real airdrops, you can avoid the traps of scammers.

Disclaimer: Please keep in mind that the content of this article is not financial or investing advice. The information provided is the author’s opinion only and should not be considered as direct recommendations for trading or investment. Any article reader or website visitor should consider multiple viewpoints and become familiar with all local regulations before cryptocurrency investment. We do not make any warranties about reliability and accuracy of this information.

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