It’s startling watching how new digital currencies are emerging and growing, increasing the challenge for crypto traders or investors to monitor the new projects adequately. Because of this, crypto airdrops are introduced by some cryptocurrency projects as a unique strategy capable of increasing awareness. Crypto airdrop operates in a typical way and comes in several types. Nonetheless, they are not always legitimate, though everyone is interested in complimentary crypto. So let’s look into what they really are, how they operate, why they are performed by crypto projects, their various types, and how to safeguard yourself from being scammed.
What is a crypto airdrop?
A crypto airdrop is a strategy that involves dispensing crypto assets to numerous wallets directly from a digital currency project. Tokens are transferred to potential or existing users purposely to cultivate novel crypto. These digital assets are distributed with no charges, but users may need to undergo processes to claim them. These may include being in possession of a specific amount of assets in your wallet, subscribing to a newsletter, or following social media handles.
In addition, there may be a crypto airdrop if there is a need to split an existing virtual currency into two different versions. An illustration is the split of Bitcoin (BTC) and Bitcoin Cash (BCH) in 2017. When the split occurred, airdrop ensured that everybody with Bitcoin received free Bitcoin Cash.
In 2014, the first airdrop (Auroracoin) was introduced. This Icelandic project offered 31.8 AUR coins to all Icelanders with a permanent resident ID. Unfortunately, the project’s market cap value became zero in months because it was not well-planned. Consequently, virtual assets become worthless. However, a new guerilla marketing method came up through Auroracoin for the benefit of numerous other crypto projects that would emerge later. In 2017, AirdropAlert.com (the first airdrop site) was launched to unite every crypto airdrop event on a single online platform.
In 2017, the incredible boom of the initial coin offering (ICO) contributed to the popularity of crypto airdrops. Notwithstanding, several digital currency projects today still see crypto airdrops as an excellent marketing strategy. The benefits that projects and asset holders stand to get from the crypto airdrop model contribute mainly to their growing popularity. Through this model, coin holders communities can be introduced to new projects as an awareness before they are finally launched. Crypto platforms may decide to use the model for their loyalty programs– releasing them as a reward when the coin holder gets to an impressive level of loyalty.
How do crypto airdrops work?
Every cryptocurrency airdrop is characterized by uniqueness, but there is a typical way they work. You should check this out:
- Before you can access airdrops, you may need to sign up for them first. This is due to how they may be publicized via social media accounts or the site of a crypto project and may be added to a list on websites that focus on airdrops.
- You may need to meet some requirements to have access to crypto airdrops. As a prospective user, it may be an obligation that you meet some airdrop requirements or undergo some crucial processes. For instance, to earn the eligibility status for an airdrop, you may need to be a holder of a specific amount of crypto assets or share a crypto project on a social media platform.
- The airdrop is a process that must be smartly conducted. The organizers of crypto airdrops will start transactions that distribute the virtual assets to every eligible user’s digital wallet to complete the airdrop. Besides, using smart contracts may be a way to complete the airdrop.
- As an eligible coin holder, you will have the crypto asset deposited in your wallet. As long as your wallet is compatible with the complimentary digital asset that is being airdropped, you will see the currency automatically in it.
- After completing a crypto airdrop, the number of coins in circulation for the new projects will increase, perhaps dramatically.
Why do crypto projects perform airdrops?
Crypto airdrops share free tokens or coins to get less effort in return from the recipients. But why will new crypto projects involve distributing a portion of their resources to eligible participants for free? The motive behind airdrops is usually to assist a new digital currency project get required awareness through proper network participation and visibility. When tokens or coins are distributed widely and freely to new users, there is a high possibility that the network will grow rapidly. The apparent implication of distributing a crypto airdrop widely is that numerous individuals will process the new asset, which will lead to the mass awareness of the specific project, facilitate its popularity, and democratize its ownership.
Moreover, it is a positive metric that the number of new assets is higher. This helps the project remain decentralized as far as coin ownership is concerned. Besides, an airdrop is a way to attract coin lovers to use and promote a new project. With this, an initial user base can be formed before the new project is added to crypto exchanges.
Looking at airdrop from the recipient’s angle, many participants will be attracted primarily by the earning benefits (complimentary assets) and may think of liquidating the airdropped currencies quickly. Nevertheless, a new participant may likely gain enough knowledge about the project and find holding to the accrued assets as wise or decide to be a regular user of the airdropping platform.
It should be noted that it’s possible for airdrops to deceive with counterfeit growth through the wrong impression. So, you should do your research correctly before adoption. For instance, you should know that a project is not genuine or lacks public acceptance if nobody uses its coin, held by hundreds of thousands of addresses.
Types of airdrops
Airdrop models come in different types. Let’s explore them one after the other:
This model is to airdrop digital currencies to participants that seek to promote a new project. It requires them to meet specific requirements such as sharing online content on social media platforms and joining the official social media handles of the underlying platform.
Bounty airdrop is an uncommon model of distribution of coins, but it is a way to attract people to participate in the marketing activities of the new project. In addition, participants can gain extra coins via referrals under this model. You may be required to fill a form out using the address of your digital wallet and offer proof of task completion to claim a bounty airdrop.
This model involves sending new project coins to the wallets of a designated number of users. The coin is made available for early adopters of the underlying platform or actual members of the community. The only action that a participant needs to take is to stay engaged with the community and follow its protocols.
This model involves distributing free digital assets to those that possess a specific amount of tokens in their digital wallets. As a holder of this asset, the particular time and date that you begin to hold the currency will be a snapshot by the project team. Meeting the required minimum amount in your wallet, you can claim the free assets based on your holdings at the time when the snapshot was taken.
Several new projects airdrop their new coins to BSC, Ethereum, or Bitcoin wallet holders because of how large they are. For instance, there was a crypto airdrop of 3 billion Stellar Lumens to Bitcoin holders in 2016– it’s an exclusive airdrop to users in the BTC network.
How to avoid airdrop scams?
It is vital that you avoid airdrop scams if you intend to seek airdrops. There are counterfeit key scams, or some airdrops are fake. This may involve a situation when scammers attempt to gain control over your funds. Or get a hold of your private key by pretending to offer you a crypto airdrop. This is why it’s advisable always to try to avoid connecting the wallet to untrusted and unreliable parties.
In addition, scammers may sometimes send a fake digital currency into your crypto wallet, and this will be unknown to you until it becomes impossible to exchange or sell it. Also, you may be asked to transfer a digital currency to an unknown address to unlock free assets. You should understand that no legit airdrops will require funds from you. So, it’s essential to be clever with the messages you receive about airdrops.
Notably, knowing the legal status of an airdrop can be tricky. And this is why it is crucial to research before you sign up, particularly when you’re required to link your crypto wallet to a platform. To prevent airdrop frauds, you must first visit the site and social media handles of the project. Do a thorough check to know if the event is genuinely taking place. In case the project is entirely new to you, ensure that you do more research within the crypto community to ascertain the reliability and trustworthiness of the project. If you sense any shady event or cannot access convincing or enough information, it’s better to disregard the offer.
Another smart way to avoid airdrop fraud is to get a new email address and wallet set aside only for airdrops. With this, you can safeguard the money in your wallet from any phishing operations relating to airdrop. Also, you must avoid handing out the key that is meant to be kept private.