Airdrops are a marketing tactic in the cryptocurrency world that involves distributing coins or tokens to wallet addresses in order to raise awareness of a new virtual currency.
The community members who are actively participating in the blockchain receive small amounts of free virtual currency, which they can use however they want. For example, sometimes people get paid for retweeting a post from the company that issued the currency.
Airdrops are a form of promotional activity undertaken by blockchain-based businesses to help launch a cryptocurrency project. Its goal is to raise awareness about the cryptocurrency project and encourage more people to trade in it once it goes live as an initial coin offering (ICO).
Companies will typically advertise airdrops on their website or various cryptocurrency forums. The coins or tokens are then distributed to current holders of common crypto wallets, like Bitcoin or Ethereum.
A recipient must maintain a certain amount of the cryptocurrency coins in their wallet to receive the free gift. Alternatively, they may need to accomplish a specific action, such as posting about the currency on a social media network, connecting with a blockchain project member, or creating a blog entry.
A 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 known as a dusting scam. Users should always be vigilant about unsolicited deposits into their crypto wallets.
With the harsh competition among cryptocurrency startups, airdropping becomes necessary to make your startup noticeable. There are many businesses that offer assistance with crypto airdrops like alerts, listing services, and marketingfine-tuning. Unfortunately, not all of these businesses can be trusted…
Michael J. Casey, the Chair of CoinDesk’s advisory board and a collaborator at MIT’s blockchain research initiative, said in a blog post for CoinDesk that if a cryptocurrency is to succeed, it must have some form of marketing. “A currency is meaningless unless people use it frequently. And you can’t achieve widespread usage unless someone makes an investment in order to stimulate usage,” he added.
However, there have been warnings from others in the industry about cryptocurrency airdrops. For example, Pierre Rochard, the creator of Bitcoin Advisory, tweeted that crypto airdrops can be pump-and-dump schemes. That is, the owners of the cryptocurrency might be artificially boosting its value to make a quick buck.
“Watch out for give-away scams like this: 1. Pre-mine tokens for yourself and your friends immediately 2. Exchange the pre-mined coins with each other to inflate the price 3. Use a ‘give away’ of the tokens as bait for retail investors 4. Retail investors promote the token on your behalf, selling it shortly after.”