What Is a Cryptocurrency Airdrop? The Ultimate Guide

Airdrops, as used in the business of cryptocurrency is a form of marketing which involves sending coins and tokens directly to addresses for wallets in order to promote awareness of a new virtual currency.

Small amounts of the virtual currency are sent to the wallets of members of the blockchain community free or in return for a small cost, such as the retweeting of a tweet sent by the company issuing the currency.

Important Takeaways

– A crypto airdrop is an advertising method employed by startups in the cryptocurrency space.

– It involves delivering cryptocurrency tokens into the accounts of existing cryptocurrency traders, either for free or in exchange for a small promotion.

The purpose of the airdrop is to spread awareness and increase the ownership of the currency to help the currency’s start-up.

Although some airdrops are legitimate, other airdrops have been seen as fraudulent or scammy.

Understanding Cryptocurrency Airdrops

The airdrop is a promotion event typically carried out by blockchain-based startups to help start-up a virtual currency venture. Its aim is to spread awareness about the cryptocurrency initiative and also to increase the number of people using it, when it lists on an exchange for an Initial Coin Offering (ICO).

Airdrops are typically advertised via the organization’s website as well as on cryptocurrency forums, and the tokens or coins are sent only to holders of current crypto wallets, usually the bitcoin or ethereum wallets.

In order to be eligible for the reward, the recipient might need to hold a minimum amount of crypto coins inside their account. Alternatively, they may need to accomplish a particular task, like posting about the currency on a social media platform and interacting with a particular person in Blockchain, for instance or writing blog posts.

Special Considerations

Legitimate crypto airdrop never seeks capital investment in the currency. Its aim is purely promotional. On other hand, some crypto scams involve sending micro amounts of bitcoin or other cryptocurrencies to unsuspecting recipients , in what is commonly referred to as a dusting fraud. Users should always be vigilant about unsolicited deposits into their crypto wallets

Advantages and Disadvantages of Cryptocurrency Airdrops

Benefits

Given the extreme competition among cryptocurrency startups, an airdrop is an attempt to differentiate from the rest of the pack. Certain companies that specialize in cryptocurrency airdrops provide alerts to users, listings services for startups, as well as a variety of marketing solutions to improve their airdrops. There are always both good and bad businesses in this industry.

Negatives

But, there have been warnings on cryptocurrency airdrops from others in the business. For example, Pierre Rochard, the founder of Bitcoin Advisory, tweeted a warning that cryptocurrency airdrops could be a form of pump-and-dump. The holders of the cryptocurrency might be manipulating its value to make profits quickly.