What is a Crypto Airdrop?
An airdrop, in the cryptocurrency industry, is a marketing stunt that involves sending coins or tokens to wallet addresses in order to raise awareness of a new virtual currency.
Small amounts of the new virtual currency are sent to the wallets of active members of the blockchain community for free or in exchange for a small service, such as retweeting a message sent by the currency’s issuer.
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Key points to remember about cryptocurrency Airdrop Free:
- Crypto airdrop is a marketing method used by startups in the cryptocurrency space.
- It involves delivering bitcoins or tokens to the wallets of existing crypto-currency merchants, either for free or in exchange for a small promotional service.
- The airdrop is intended to raise awareness and increase ownership of the currency startup.
Understanding a Cryptocurrency Airdrop
An airdrop is a promotional activity usually carried out by blockchain-based startups to help kickstart a virtual currency project. Its purpose is to raise awareness of the crypto-currency project and get more people to trade in it when it is listed as an initial coin offering (ICO).
Airdrops are usually promoted on the company’s website, as well as on crypto-currency forums, and the coins or tokens are only sent to current crypto wallet holders, usually those of bitcoin or Ethereum.
To qualify for the free gift, a recipient may need to keep a minimum amount of crypto coins in their wallet. Alternatively, they may need to perform a certain task, such as posting about the currency on a social media forum, connecting with a particular member of the blockchain project, or writing a blog post.
A legitimate crypto airdrop never seeks to invest in the currency. Its purpose is purely promotional. On the other hand, some crypto scams involve sending micro-amounts of bitcoin or other crypto-currencies to unsuspecting recipients in what is known as a dust-up scam. Users should always be vigilant about unsolicited deposits into their crypto wallets.
Crypto Airdrop Advantages and Disadvantages
Given the extreme competition among crypto-currency startups, an airdrop is an attempt to stand out from the crowd. Some companies dedicated to crypto airdrops offer user alerts and referral services to startups, as well as a range of marketing services to hone their airdrops. As always, there are good and bad companies in this space.
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Michael J. Casey, chairman of CoinDesk’s advisory board and an advisor to MIT’s Blockchain Research Initiative, argued in a CoinDesk blog post that a certain kind of marketing is critical to a cryptocurrency’s success. “A currency is nothing if it is not widely used. And that can only be achieved if people make expensive efforts to encourage widespread use,” he wrote.
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However, there have also been warnings about cryptocurrency airdrops from other industry players. For example, Pierre Rochard, the founder of Bitcoin Advisory, tweeted a warning that crypto airdrops can be pump-and-dump schemes. In other words, the owners of the crypto-currency could artificially inflate its value to make a quick profit.
Things to keep In Mind When it comes to Crypto Airdrops
Beware of scams like this:
- Instantly pre-mine tokens for yourself and your friends.
- Swap pre-mined tokens with each other at pump price.
- Bait retail investors with a “giveaway” of tokens.
- Retail trade evangelizes the token for you, dump.”