What is an Airdrop and How Do They Work?
The cryptocurrency world has a language of its own, replete with terms and expressions that are unique to it. Thus, understanding the crypto ecosystem requires a level of familiarity with the cryptovocabulary. One such term that is peculiar to the crypto world is airdrop. It’s particularly important to learn about this one because it represents free crypto! Read on to find out how you can start benefiting from airdrops.
What is an Airdrop?
An airdrop in cryptocurrency describes the process in which a cryptocurrency project team distributes tokens to users for free. Airdrops are commonly employed by cryptocurrency startups as a means of raising awareness for their projects. Free tokens are literally “airdropped” into the wallet of these early adopters to get the buzz going. Additionally, established coins and crypto exchange platforms have also been known to carry out airdrops.
How does an Airdrop Occur?
This depends on whether the airdrop was announced beforehand or whether it was a surprise airdrop. Most crypto startups looking to bootstrap their projects tend to go with the former. At a predetermined date, usually after the ICO, early adopters of the project get their free tokens. Prior to the airdrop, these early adopters would have registered and completed a task or two. These tasks could include referrals and social media posts.
For already established coins and cryptocurrency exchange platforms, their airdrops are usually of the surprise airdrop variety. Unless one is a member of the inner circles of developers for these enterprises, it might be impossible to know beforehand. Upon a certain day, crypto tokens airdrop directly into the wallets of users.
Likely Reasons for Airdrops
There are a number of reasons why a cryptocurrency airdrop can occur. Some of these reasons include:
1. Creating Awareness and Bootstrapping a new Cryptocurrency
Hype and buzz are valuable commodities in the cryptocurrency world. Many people are actively looking for the next big thing. The promise of free tokens is a useful incentive that has the potential of attracting a lot of people to the project.
An announcement of an upcoming free tokens dropping is likely to get a project a lot of attention on social media and in the crypto community. Some crypto airdrops involve social media posts and other digital interactions which can help the coin become a trending topic.
It is also a way of bootstrapping a cryptocurrency project so that it literally hits the ground running from the beginning. After the hard fork of the Bitcoin (BTC) network, which gave birth to Bitcoin Cash (BCH), the BCH development team gave all participants of the BCH fork an equivalent amount of their BTC holdings. This means that all BCH participants at the inception of the BCH project had as many BCH coins as BTC coins.
2. Loyalty Rewards for Customers
Wallet services and cryptocurrency exchange platforms also carry out airdrops as rewards for their customers. A good example was when Binance gave 500 free TRX to their customers between October 31 and November 14, 2017. Investors who had at least 0.003 BTC or the equivalent thereof and had undertaken at least one transaction on their Binance trading account, received 500 TRX.
3. Acquiring Valuable Lead Database
In the digital world, if you aren’t paying for a product, then it is most likely that you are the product. Lead database generation is a key ingredient in the marketing strategy of many enterprises. In exchange for free coins, some crypto projects collect customer data that can be of use to them in the future.
Some cryptocurrency airdrops require the completion of online forms that can help crypto startups create useful databases of potential adopters of the project. The Universa.io airdrop even required participants to share their Facebook list in order to be eligible for the airdrop.
How to Participate in Airdrops
Subscribe to Crypto Airdrop Monitoring Services
Access to information is an important part of being able to participate in crypto airdrop campaigns. There are a number of online services that monitor and provide alerts for upcoming airdrops. In addition, these services provide relevant information about the airdrop campaign which can include the number of days, qualifying criteria etc. These services include Telegram groups, websites, and twitter handles. Some online crypto airdrop monitoring services are Airdropalert, Icodrops, and Airdropaddict.
Get a Suitable Wallet
Airdrops deliver coins directly to a wallet address. In order to participate in a crypto airdrop, you will need to have a crypto wallet. The specific type of wallet that is supported by the airdrop campaign is always stated by the organizers of the airdrop. Some airdrop organizers have been known to specify non-exchange wallets. i.e., wallets that aren’t domiciled on cryptocurrency exchange platforms. Some notable non-exchange wallets include Jaxx, Exodus, and Electroneum.
Furthermore, it is important to maintain a high level of security awareness when participating in cryptocurrency airdrops. Like all other aspects of the market, there are fraudulent airdrop campaigns. Never reveal your private key to any airdrop organization. Ensure that tokens dropping is a legitimate campaign by checking on the aforementioned airdrop monitoring websites or directly on the website of the organizers. There have been clone dropping campaigns the purpose of which was to hack crypto wallets and steal identities. As always, never reveal your private key to anyone.
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