This guide explores the concept of airdrops in the cryptocurrency world and how you can get free coins through participating in airdropping.
Before the advent of the internet, a business had to spend a large amount of money advertising their products and services through the traditional medium of television, radio and newspapers. Door-to-door sales and physical distribution of flyers were also a common marketing strategy. However, the advent of the internet and social media allowed business to reach their target audience more effectively and at a significantly lower cost.
In the cryptocurrency world, a new and novel form of marketing has been attracting lots of attention. This new phenomenon is called an “airdrop”.
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What is Airdrop?
Airdrop, or airdropping, is the process of distributing coins or tokens to a large amount of cryptocurrency wallet addresses at no cost.
In other words, you can get coins for free.
An airdrop is simply a way for cryptocurrency projects to promote themselves and increase brand awareness through the distribution of their native coins. In order to incentivize participants, they are usually required to complete certain trivial tasks before they are eligible for the airdrop. These tasks may include joining their Telegram group or promoting the project through social media. Sometimes, no effort is needed at all; participants can automatically qualify if they own a certain amount of Bitcoin (BTC) or Ethereum (ETH). It is a win-win situation for everyone involved; participants receive free coins while the issuing project benefits from the enhanced branding and interest from the community.
Reasons for An Airdrop
Cryptocurrency projects may choose to engage in an airdrop due to a variety of reasons that include:
With over 1,800 coins in existence and many more coming, it is hard to be noticed in this highly crowded market. An airdrop is a great marketing strategy that can attract a large amount of exposure and awareness into a project. With greater interest, new users might be enticed to explore the project further.
Alignment of Interests:
There’s an immediate alignment of interests for those that receive free airdropped coins. Receivers would pay more attention to the project since the success of the project equates to an increase in the value of the coin. They might even become an early adopter.
Since Initial Coin Offerings (ICOs) are banned in some countries, airdropping is an alternative way by which those in affected countries can have access to those coins.
Sign of Appreciation:
For extremely popular cryptocurrency projects, the public may not get the chance to participate in the public ICO (and acquire the native coins) if the project has raised the intended capital from private investors. In order to express gratitude towards its community and foster inclusion, the project would organise an airdrop to its supporters.
Fair Token Distribution:
An important trait of open source decentralisation is ensuring a level-playing field for all participant and removing any inequalities that may give an unfair advantage to others. An airdrop is an equitable mechanism to facilitate inclusion towards a distributed network of users.
An Airdrop is a great marketing tool and allows for brand awareness, and quick user adoption.
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How to Participate in Airdrop
Although airdrops are free, you will need a few things to participate. Here is what you need to get started with airdrops:
You should create privately-owned, digital wallets to safely store your coins. This does not apply to the wallet in your exchange account since you do not own your private keys. Furthermore, you can never fully trust a third-party to keep your coins safe. You should create your own cryptocurrency wallets that is fully owned and managed by you. An Ethereum-supported wallet – MyEtherWallet or MetaMask – is recommended since most coins are created on the Ethereum blockchain (ERC20). The safest wallet is a hardware wallet, which is a physical device that stores your coins. The most common hardware wallets are Trezor, Nano Ledger and Keepkey. Here is a guide that compares the different types of cryptocurrency wallets.
Valid Email Address:
Most airdrops will require you to sign up or apply for the whitelist using an email address. An email address is also needed when registering at an exchange. Having an email address dedicated only to airdrops can be convenient if you’re looking to focus big time on getting airdrop tokens.
Social Media Accounts:
Some airdrops require you to share about the project on your social media accounts before you are eligible for airdropped coins. The range of actions can include sending out a Tweet and sharing posts on Facebook pertaining to the project. In exchange for that, you will receive free airdropped tokens.
Comply to the Deadline:
There is usually a deadline when registering for the whitelist of the airdrop. Do ensure that you have complete your registration before the stated deadline with all requirements fulfilled. It is not uncommon for a project to initiate more than one airdrop.
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Types of Airdrops
There are a few different types of airdrops with each requiring a different set of actions or compliance to a set of requirements. The categories of airdrops include:
Standard Airdrops usually just requires you to sign up for updates or newsletters on the project’s website. You would only need to register your name and email address.
Bounty airdrops require you to perform some form of social action such as tweeting out a link of the project’s website or referring other users to participate in the airdrop. You would be rewarded with the coins for each action that you complete successfully.
This type of airdrop require you to own a specific coin that is stored in your cryptocurrency wallet, such as Bitcoin (BTC) or Ethereum (ETH). You will receive the airdropped coins according to the ratio set by the project. For instance, a 1:5 BTC ratio entitles you to 5 airdropped coins for every single BTC you’re holding.
Exclusive airdrops are usually managed and hosted by websites and social media accounts with large followings. As a member of the site, or a follower of a social media account, you will be entitled to participate in an airdrop that is exclusive to that specific community that you are a part of. Websites like Airdrop.io allows you to participate in exclusive airdrops if you sign up to their newsletter.
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Things to Look Out For
Unfortunately, many have been scammed or duped when it comes to the airdropping process. Here is an awesome infographic depicting some best practices to follow to safeguard yourself when participating in airdrops:
As a rule of thumb, you should never promote a project which does not seem legitimate and more importantly, never ever share your private keys. Private keys are equivalent to your PIN number for you bank account; if anyone has access to your wallet’s private keys, they would have access to your coins. Honestly, there is no need for revealing your private keys throughout the airdropping process.
An obvious red flag is the requirement of first donating or sending a certain amount of coins (usually ETH) before being eligible for airdropped tokens. Here is an example below:
Airdrops are supposed to be free, and a requirement to send coins in exchange for native coins is highly likely a scam. Always check out the validity of announcements and social media accounts before participating in an airdrop. It is essential to perform some due diligence before making a final decision on whether or not to participate.
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What Happens Next?
At the time of an airdrop, the airdropped cryptocurrency might not have any value. Until it reaches an exchange, you’d have to retain it in your wallet and wait for listing updates. Once it does reach an exchange, you can either trade it or continue holding it for the long-term. Performing fundamental analysis on the project is a good way to assess if the project is a good investment to hold on to.
How can I learn about future Airdrops?
There are many websites dedicated to reviewing and listing airdrops such as airdropalert.com, and airdrops.io. You can join a mailing list, a telegram group or even follow a twitter account in order to learn about future airdrops. Be sure to stay up to date with current crypto news and strive to be an active participant in the cryptocurrency community to be updated with recent airdrops.
(You might also be interested in: Crypto Beginners Guide: 5 Things Crypto Newbies Should Know)
Beneficial Resources To Get You Started
If you’re starting your journey into the complex world of cryptocurrencies, here’s a list of useful resources and guides that will get you on your way:
Trading & Exchange
Read also: Crypto Trading Guide: 4 Common Pitfalls Every Crypto Trader Will Experience and Guide To Cryptocurrency Trading Basics: Introduction to Crypto Technical Analysis.
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I’m Aziz, a seasoned cryptocurrency trader who’s really passionate about 2 things; #1) the awesome-revolutionary blockchain technology underlying crypto and #2) helping make bitcoin great ‘again’!