What are Crypto Airdrops?

Most of us are already aware of the numerous cryptocurrencies available. While the argument about their use rages on, an increasing number of people are becoming interested in the crypto realm. 

 

As a result, more participants in the industry are entering the market, each with a desire to establish popularity for their blockchain-based business. A bitcoin airdrop has become a very useful tool in this regard.

 

What exactly is an airdrop? In essence, an airdrop is a promotional offer to players to keep them involved in one of the numerous games you play online. This is accomplished through crypto airdrops, which distribute free crypto coins or tokens associated with the service. They normally request that the participants advertise their service on various social media channels in exchange.

 

There have been a number of airdrops so far. Most bitcoin investors have experienced an airdrop from one of the platforms in the past. If you've heard of crypto airdrops but aren't sure what they are or how they function, here's your guide to understanding what they are and how they work.

 

What exactly are Airdrops and how do they work?
 

The transmission of digital assets from a crypto project to several wallets is referred to as a crypto airdrop. To raise awareness of the initiative, coins or tokens will be distributed to present or potential users. 

 

Although these tokens are given out for free, certain airdrops require users to complete particular activities before they may claim them. Crypto airdrops were popular during the initial coin offering (ICO) frenzy of 2017, and many crypto projects continue utilise them as a marketing technique today.

 

New blockchain based businesses begin by advertising airdrops for their virtual currency on their website or on a cryptocurrency forum. The corporation then transfers the coin or tokens to established bitcoin wallet holders after raising awareness. You might be wondering how the corporation selects who gets the tokens. There are a few things that can impact your selection.

 

Watch this: What is an Airdrop and How Do You Get Them?

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Types of Airdrops

 

1. Holder airdrop

 

Holder airdrops give away free tokens to people that have a particular amount of cryptocurrency in their wallet. On a regular basis, the project team takes a snapshot of users' cryptocurrency holdings at a given date and time. Recipients can claim free tokens based on their holdings at the time of the snapshot if their wallet balance satisfies the minimal criteria.

 

2. Bounty airdrop

 

Users must do certain actions in order to receive a bounty airdrop, such as posting a post about the project on Facebook, joining the project's official Telegram, or publishing an Instagram post and tagging a few friends. You'll most likely be required to fill out a form with your wallet address and confirmation that you completed the activities in order to claim a reward airdrop.

 

3. Standard airdrop

 

As a marketing tool, a basic cryptocurrency airdrop deposits a certain amount of native coin or token into existing wallets. It's usually done to promote the brand and urge more people to embrace the asset, which happens a lot during an ICO. In most cases, you only need to create an account with the new project and enter your wallet address during the distribution event.
 

4. Exclusive airdrop

 

Exclusive airdrops only distribute cryptocurrency to specific wallets. Typically, the awardees have a history with the project, such as being an active part of the community or an early supporter.
 

Also Read | Hot Wallet Vs Cold Wallet - How are they Different? 

 

 

Why are Airdrops so important in the Crypto World?

 

As the crypto ecosystem grows in popularity, new entrepreneurs are finding it increasingly difficult to distinguish out in a crowded industry. The number of people exchanging and holding a virtual coin determines its lifespan. 

 

Airdrops assist get things started by distributing currencies or tokens to a small number of people in order to build an initial user base without forcing them to spend money on something they may not be aware of.

 

The promotion of a new platform or service among the crypto community is one obvious motivation for airdrops. As news of the service spreads throughout the crypto industry, the likelihood of people flocking to it grows rapidly. This works similarly to a conventional business's internet marketing.

 

The number of people who invest in the currency determines a big part of its value. The value of a currency rises in the market as the volume of transactions, as well as the number of holders, rises. As a result, an airdrop is a great way to get the word out to a big audience.

 

What is the procedure for receiving an Airdrop?

 

The airdrop requires participants to have a cryptocurrency wallet because it involves a money transfer. These are the same wallets that you use to store your Bitcoin, Ethereum, or any other cryptocurrency you own. When you sign up for an airdrop, most platforms will ask for your wallet address.

 

So, once the airdrop deadline passes, the firm will send the promised amount to your wallet account, if you are one of the lucky winners. It's worth noting that different sites may demand you to have a wallet dependent on the blockchain they use. The Ethereum blockchain is used in the majority of blockchain initiatives.

 

As a matter of fact, if you want to participate in the platform's airdrop, you'll need to keep track of the blockchain on which it's based. Because you'll need a wallet that's subsidized with the coin you're hoping to receive for free.

 

Also Read | Token Swaps - An Overview 

 

Why should you be cautious when it comes to airdrops?

 

Because unscrupulous actors have historically exploited airdrops to defraud crypto users out of their coins or tokens, it is always smart to approach an airdrop with caution. For example, a con artist may distribute harmful tokens to a specific group of users in order to pique their interest. 

 

When these individuals go online to find out what these tokens are, they will surely be routed to the scammer's website, where they may fall victim to phishing schemes.

 

In other circumstances, scammers may ask consumers to send part of their own cryptocurrency to a wallet in exchange for the promise of receiving fresh tokens. If the airdrop amount is unusually high, that's another red flag to look out for.

 

Users should be careful of such scams and only participate in airdrops of legitimate platforms that are previously posted on legitimate websites. Another criterion to look out for is when consumers are asked to send cryptocurrency in exchange for being enrolled in an airdrop. 

 

Or if the airdrop's promised amount is far too high. In such instances, it is best to avoid potentially hostile action or conduct extensive investigation about the project's scope. As a fact, before participating in an airdrop, individuals should undertake their own background research on certain crypto platforms. 

 

It can be tough to resist the allure of free tokens or coins from a platform with the potential to skyrocket in value, but remaining alert will ensure that your cryptocurrency holdings are not jeopardized.

 

Also Read | An Economic way to mine Crypto - Mining Pools 

 

Watch this: Cryptocurrency: The Future of Money | Saketh Joshi | TEDxMAHEDubai

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Summing Up

 

Airdrops are a relatively harmless marketing ploy designed to provide community rewards for new projects and their early backers. Crypto airdrops help cryptocurrency startups stand out and acquire traction in the market. 

 

While they may appear insignificant at first, they could end up being extremely valuable to crypto newbies or enthusiasts eager to get in on the ground floor of potential initiatives without having to invest any money.

 

It can also be a fantastic opportunity for crypto aficionados to diversify their holdings by investing in new tokens. However, there are likely to be more scam airdrops than legal ones out there, so be cautious and conduct your own research before signing up.