If you’ve been involved in cryptocurrencies for a while, you might have heard the phrase ‘airdrops’. But people who are reading about this concept of “crypto airdrops” for the first time might wonder what it is. While airdrops are typically used to provide essential supplies to areas that have been affected by wars and natural disasters, crypto airdrops are a little different. In layman’s terms, an airdrop means giving away a certain number of free coins or tokens to the crypto community for free. It’s a kind of donation.
Typically, to receive an airdrop, you need to have some relevant coins stored in your wallet. For example, if the company doing the airdrop is based on Litecoin, you need to have some LTC in your wallet. If it’s based on Ripple or Ether, you’ll need to own some XRP or ETH. Tokens given away for free by companies are usually considered rewards.
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Why are Airdrops distributed?
The idea of giving away free coins is part of a marketing strategy. Most coin creators and blockchain-based startups choose to perform airdrops for a variety of reasons.
Airdrops are always a win-win for project owners and the crypto community. Companies that offer free tokens attract a large number of participants to their project and gain more followers on social media. Participants, in turn, receive a reward for likes, comments, shares, and referrals on social media. It’s a tried and tested business model that usually works very well.
Communities are very important when it comes to cryptocurrencies or ICOs. And giving away free coins is one of the best strategies to build a bigger community.
Blockchain-based startups get more benefits from conducting a cryptocurrency airdrop. Here are three major benefits:
1. Free Marketing: A new ICO usually spends a fortune on marketing their project. They have to spend thousands of dollars on paid listings, paid posts, and paid ads. With airdrops, they can reduce their marketing expenses as news about airdrops spreads very quickly. It attracts people to your project, which in turn helps you get more investors during your initial coin offering.
2. Online Attention: With dozens of cryptocurrency-based projects coming out every month, it’s getting hard for new projects to get attention. Airdrops help them gain attention as they are covered by many social media sites, websites, YouTube channels, etc. Giving someone free money is a great way to get their attention. This could stimulate the adoption of a new coin better than an ICO.
Increases the price of an existing coin: If a new digital currency is airdropping, volumes will increase significantly as investors jump in to take advantage of the airdrop. Demand for the coin may increase as people buy it just to be part of the coin's future release. As a result, this will increase the value of the currency in the short term. An airdrop will also increase public awareness of this coin and increase volumes in the long term.
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How much can I earn from airdrops?
Not all airdrops will make you a millionaire overnight, but you can earn up to $10,000 (if you’re lucky). While most tokens will remain worthless, there will be a few that can make you feel rich. For example, in January 2018, users who signed up for the Ontology (ONT) email newsletter for free received 1000 ONT tokens. At that time, the value of ONT tokens was completely zero. In June 2018, a single ONT is worth $8.50. So, participants in that airdrop owned ONT coins worth over $8,000.
How can I find Airdrop information?
Information about airdrops can be found on popular sites like BitcoinTalk.org, Reddit, and Facebook groups. There are also websites like Airdrop alert, ICOdrops, and Airdropaddict that alert people to the upcoming airdrop launch and distribution.