Cryptocurrency Airdrops Tutorial — 4 Things to Know about this Crypto Concept
Ever heard of the term ‘cryptocurrency airdrops’ and confused about what it meant, how it happens, its motives, and what it is all about.
Well, you might be imagining an airplane pouring down coins from above. But believe me; it’s nothing like the picture you are already painting in your head right now.
During wars, disasters, or crisis or in a situation where people are trapped in an area inaccessible by road, airdrops were done to provide survival supplies to these groups of people.
In the cryptocurrency space, airdrops have a different approach and meaning. The world of crypto has its own acclaimed vocabulary which is still expanding due to the evolving market.
In this piece, I shall be explaining cryptocurrency airdrops in full details.
Cryptocurrency Airdrops Defined
Imagine you walk into a grocery store; there are sales reps at each section of the store.
But looking around you noticed one of the sales reps offering freebies.
Who does not like freebies? You walk up to the sales rep and ask for your freebie, he/she gives you the freebie or tells you to undergo a survey to be entitled to the freebie.
All in all, you get a bite of your free gift and it’s so sumptuous. You ask, where can I get this? And he/she tells you second shelve to your left, Sir.
Did you figure that this single bite may have set an impulse for you to buy the product?
This is the simple definition of airdrops and its motive.
Airdrops refer to the process whereby a cryptocurrency project distributes cryptocurrency tokens to the wallet of some users for free.
Airdrops are normally carried out by blockchain start-ups to bootstrap and raise awareness for their cryptocurrency enterprise.
Similarly, already established blockchain-based enterprises like wallet providers also engage in airdrops.
Process of Airdrops
There are basically two ways by which an airdrop can be carried out. These are;
- Airdrops that come to people as a surprise.
- The airdrops that are usually announced beforehand.
Already established blockchain based enterprises tend to go along with the surprise concept of airdrops. Knowing about these kinds of airdrops largely depends on how involved you are in the crypto space.
These kinds of airdrops get people commenting on online forums that they received some coins into their wallets but do not know where the coins came from.
For blockchain start-ups, on the other hand, they mostly favour the pre-airdrop announcement. This is simply to get the buzz around and create awareness.
These kinds of airdrops usually involve the completion of a certain number of tasks in order to be entitled to the airdrop. Upon completion, the free coins are released to qualified users.
Why are Airdrops Carried Out?
I am sure you are intrigued that ‘why give out valuable tokens or coins to users when you can actually sell it to users’? The following are some of the common reasons for carrying out airdrops;
To reward loyal customers and users;
Time to time, blockchain based enterprises such as wallet providers, exchanges etc. wish to appreciate their users and subscribers. Airdrops could come in handy to reward loyal customers with free tokens. This could assure continued loyalty from users of such platforms. This kind of airdrop is similar to giving discount done by most non-blockchain based enterprises.
To be able to gather a Lead Database;
Business relies on marketing and marketing, in turn, relies on lead generation. Businesses pay attention to generating leads that could increase patronage.
Airdrops can also be used to generate a large lead database. In claiming airdrops, users are usually asked to fill out an online form. This form usually demands some personal data from the user which can be used to create a more effective targeted marketing strategy.
To create a buzz about a new cryptocurrency;
With hundreds of blockchain-based start-ups springing up from time to time, it is possible for a new cryptocurrency to go unnoticed without the right marketing and awareness.
Airdrops could make sure that a new cryptocurrency gets the necessary buzz it needs to be successful in the market. This could be seen in the case of the bitcoin fork into BitcoinCash.
During this, existing holders of Bitcoin were rewarded with an equivalent amount in BitcoinCash. This action ultimately made BitcoinCash among the top 10 cryptocurrencies in the world in no time.
How do I Participate in an Airdrop?
Get access to information on airdrops;
Partaking in airdrops requires access to relevant information. There are some websites and online forums that are committed to informing users about ongoing, upcoming, and past airdrops. Airdropalert provides a list of exclusive upcoming airdrops and the time left to take place.
You will need a wallet to receive your tokens;
Most times, airdrops are carried out using the Bitcoin or Ethereum blockchain or you could use an exchange wallet address.
However, the project team could sometimes state a specific wallet to be used such as an ‘ERC20 non-exchange wallet’. This means that only ERC20 wallets not from any exchange are supported.
Exodus, Jaxx, and MyEtherWallet are examples of compatible non-exchange wallets.
Conclusion and Recommendations
It is no longer news that ICOs and particularly airdrops might be proven ways to make a quick profit on emerging cryptocurrencies. However, in any case, be sure to;
- Confirm that you are visiting the official site of the project when joining an airdrop.
- Not provide personal information that you are not comfortable with. Identity theft and hacking attempts are prevalent in the crypto space.
- Never give your wallet private keys to anyone under any circumstance. The crypto market is highly unregulated and theft is high, even during airdrops.
If you have an interest in ICOs, you can check out the list of on-going and up-coming ICOs that we have reviewed.