Airdrops, as used in the world of cryptocurrency is a promotional tool that involves sending coins and tokens directly to addresses for wallets in order to promote awareness of the brand new virtual currency.
Small amounts of the new virtual currency are sent to the wallets of people who are part of the Blockchain community free or in return for a modest fee, like tweeting a message from the entity that issues the currency.
The most important takeaways
A crypto airdrop is an advertising technique used by startups in the cryptocurrency industry.
The process involves the delivery of tokens to the wallets of current cryptocurrency traders, for free or in exchange for a modest promotional service.
– The airdrop is meant to spread awareness and increase participation in the currency startup.
Some are legit some airdrops are considered to be scams or fraudulent.
Understanding Cryptocurrency Airdrops
The airdrop is a promotional practice typically used by blockchain-based businesses to establish a virtual currency initiative. Its aim is to spread awareness of the cryptocurrency project and to get more people trading in it when it lists on an exchange in the form of an initial coin offering (ICO).
Airdrops are typically advertised through the firm’s website, as well as on cryptocurrency forums. the coins or tokens will only be sent to current holders of cryptocurrency wallets, typically those of bitcoin or ethereum.
In order to be eligible for the present, the recipient could need to hold a minimum amount of crypto coins inside their account. Alternatively, they may need to complete a specific job, such as writing about the cryptocurrency on a social media platform or interacting with a specific member of the blockchain project, or writing a blog post.
Special Takes into Account
A legitimate crypto airdrop never seeks capital investment in the currency. Its purpose is solely to promote. On other hand, some cyber-scams involve sending tiny amounts of bitcoin, or other currencies to unsuspecting recipients , in what is commonly referred to as a dusting fraud. Users should always be vigilant about unsolicited deposits into their cryptocurrency wallets
Advantages and disadvantages of cryptocurrency Airdrops
Given the extreme competition among cryptocurrency startups, airdrops are an attempt to stand out from the rest of the pack. Some businesses devoted to cryptocurrency airdrops provide alerts to users, listings services for startups, plus a range of marketing services to fine-tune their airdrops. Like all things, there are good businesses and bad in this space.
There have also been warnings about cryptocurrency airdrops from other people in the industry. For instance, Pierre Rochard, the founder of Bitcoin Advisory, tweeted a caution about crypto airdrops that they could be pump-and-dump schemes. That is, owners of the cryptocurrency could be manipulating its value to earn a quick profit.