Don’t get into trouble because of crypto airdrops. Learn what it is, how it works, how to earn and how to stay safe from airdrop scams. Crypto airdrop is generally seen as a free token or a coin that can be converted to cash but it can also be a waste of time, energy and resources. Find out what you need to know about crypto airdrops.
Executive summary
A cryptocurrency airdrop popularly called crypto airdrop in the crypto space is a promotional strategy that involves distributing free tokens or coins to the wallet addresses of the airdrop participants. Usually, the firm issuing the virtual currency sets a designated amount of the new currency to be distributed. That is called airdrop allocation. These airdrops are sent to the wallets of participating blockchain community members for free as an appreciation for completing small tasks such as following them on social media handles, retweeting their posts, etc. The major reason for crypto airdrop is to create awareness and circulate the new tokens or coins to real people. See crypto airdrops now.
That is the whole gist in one paragraph, but if you want to be grounded with airdrops, read on. When you open your X account, Telegram or WhatsApp, one or more notifications will drop telling you about one airdrop or another and you will wonder what this means. I was once like you and I can say it was disturbing as many people were trying to catch my attention. This article will clear you vividly.
Overview of cryptocurrency airdrops
Crypto airdrop as said earlier is a marketing activity aimed at creating awareness about a virtual currency by freely distributing the tokens or coins to wallet addresses of eligible participants. The first airdrop in crypto history happened on 25th March 2014 by AuroraCoin (AUR) designed to serve Iceland. All citizens or permanent residents who submitted their national ID received 31.8 AUR.
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How crypto airdrops work
For a project to be seen as a crypto airdrop, it has to work in certain ways. Below is the way crypto airdrops work.
Identification of recipients
Normally we should have said identification of the project. But that is far from it. Before any project is airdropped, its need and use must have been identified. Therefore, the first phase of crypto airdrop is the identification of the recipients. Usually, crypto airdrops identify possible recipients based on criteria such as holding a certain cryptocurrency, being part of a community, completing specific tasks and lots more.
Airdrop announcement
Before potential recipients start participating in an airdrop, the airdrop must have been announced. The airdrop announcement can take place on the project’s website, social media, or community channels, specifying eligibility criteria and distribution methods. Finbutton is where you get free airdrop announcements, updates and more.
Snapshot
A snapshot is the act of capturing the state of a blockchain on a particular block height. It is done to record the state of the ledger, identifying who holds the required tokens or meets other criteria at that moment.
Distribution
After the snapshot comes the distribution of the tokens or coins to eligible recipients. The airdrop tokens/coins are usually sent directly to the recipient’s wallet addresses. This can be done manually by the project team or automatically through smart contracts.
Purposes of airdrops
The crypto market is huge. A lot of projects could go unnoticed if there is not enough marketing. Like every other digital product, hype and buzz through airdrops give a good boost to crypto projects. Therefore, below are the reasons for airdrop.
- Promotion: Crypto airdrop is a cost-effective way to raise awareness and promote new projects or tokens.
- User Acquisition: Distributing free tokens can attract new users and incentivize them to engage with the platform or service.
- Decentralization: By distributing tokens widely, projects aim to achieve a more decentralized and fair distribution of tokens.
- Rewards: Airdrops can reward loyal community members or holders of specific tokens. It is a win-win strategy whereby, participants acquire free tokens that could be worth something in the future and crypto projects raise awareness for their products and gain support.
Types of airdrops
- Standard Airdrop: Free distribution to existing holders of a particular cryptocurrency.
- Bounty Airdrop: Tokens are given in exchange for promotional activities like sharing on social media or referring friends.
- Holder Airdrop: Recipients need to hold a specific cryptocurrency to be eligible.
- Exclusive Airdrop: Distributed to selected individuals based on specific criteria set by the project.
Benefits of airdrops to the Crypto Project team
- Increased Awareness: Helps new projects gain visibility quickly.
- Community Engagement: Encourages community involvement and loyalty.
- Network Effects: A wide distribution can enhance the utility and adoption of the token.
Benefits of airdrops to the Crypto Project participants
- Rewards: Acquisition of free tokens or coins that could be worth something later.
- Low entry barrier: Participants don’t require rocket sciences to join, unlike crypto trading which requires good knowledge of Fundamental Analysis (FA), Technical Analysis (TA), funds and more.
- No/low cost: Airdrop money is seen as free except for some greedy schemes that require you to invest some bucks to get your tokens. Watch out for scam airdrops. It is everywhere.
How to get free airdrops
There are many ways to get free crypto airdrops. They include;
- Websites: Websites such as Finbutton list thousands of crypto airdrops and users can access them for free.
- Social Media Platfroms: You can learn about airdrops from social media platforms such as Facebook, Twitter (X), Discord, Youtube and Instant Messaging such as Telegram, WhatsApp, etc.
- Television and radio stations
- News channels and lots more.
Most airdrop projects require that you complete some tasks such as downloading their apps, visiting their websites, following their social media handles, retweeting or reposting their content, joining their channels and lots more. Ensure to have an active online presence and notable internet apps.
Where to sell airdropped crypto
Most airdropped tokens/coins are either in their pre-ICO or finished their ICO. ICO means Initial Coin Offering. It means the coin is not traded yet on the notable crypto exchanges, but you can still sell them on Airdrop Markets. Alternatively, you can check out our Exchange Market to see where you can best sell your crypto airdrops.
Don’t forget to create an account with all the exchanges listed so you can easily sell or receive your crypto airdrops when necessary. You can HODL your free crypto airdrop until it appreciates better, there is nothing wrong with that. Sell also when necessary to avoid losses.
Risks and challenges
- Spam: Airdrop project team could use unsolicited airdrops as spam.
- Regulatory Issues: Some jurisdictions have stringent regulations around token distributions, potentially classifying airdropped tokens as securities.
- Privacy Issues: Fraudulent people could use airdrops for identity theft and other related cybercrimes.
- Scams: Scam airdrops may use airdrops to deceive people, leading to potential loss of funds.
- Market Impact: Sudden distribution of tokens can lead to significant market fluctuations, affecting token prices.
Conclusion
Crypto airdrops are a powerful tool for blockchain projects to achieve various objectives, from marketing to user acquisition. However, both projects and recipients should be aware of the associated risks and ensure they comply with relevant regulations. For recipients, it’s crucial to verify the legitimacy of the airdrop to avoid scams and be aware of the potential tax implications in their jurisdiction.
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