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).
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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.”