Definition Of Airdrop In Cryptocurrency

I know you must have come across the word “Airdrop”.  Then, you begin to wonder what it is all about. Well, in this post, we shall discuss all about airdrop in cryptocurrency. This ranges from definition of airdrop in cryptocurrency to knowing about cryptocurrency airdrop. Advantages and disadvantages of cryptocurrency airdrops, with the examples of crypto airdrops, will also be discussed.  

What Is A Cryptocurrency Airdrop?

This is a form of sharing a particular cryptocurrency to people. This people must own a wallet on the blockchain network. The purpose is,  to promote that cryptocurrency. This happens when people own a token of it.   

The first step in getting an airdrop, is by creating a wallet. Once the wallet is identified, you can hold that particular token in your wallet. This happens in a given time frame. When the time elapse, the airdrop will be shared, following a particular order.  

Cryptocurrency airdrop is created for certain purposes. It enables people to know about that airdrop. Also, people are can own several cryptocurrencies. All these are forms for promoting those airdropped cryptocurrencies.

Obtaining a cryptocurrency airdrop might seem easy, but there are requirements . It may require you, to perform certain tasks. This tasks include referring people, sharing sponsored posts, etc. When you don’t meet up with this tasks, you can’t get the airdrop.

Objectives Of Cryptocurrency Airdrops ?

The whole idea of  cryptocurrency airdrops is to create awareness on a particular virtual coin. The airdrop project send tokens to various wallets that completed the tasks. Small bits of this coins are circulated around, thereby increasing the number of holders.

Understanding a Cryptocurrency Airdrop

The definition of airdrop in cryptocurrency aids easy understanding of cryptocurrency airdrop. Airdrop promotional actions are done on blockchain. When a virtual cryptocurrency emerges, an airdrop project is set up. Then the are shared to crypto wallet holders. This will make people trade more on it when it is listed on an exchange.

Airdrop projects can be promoted in certain places. It can also be advertised on cryptocurrency forums.

The main idea of crypto airdrop is for promotion. Only when it gains the promotion, it can now seek other ideas. However there are airdrop scams. Once a user accept a scam contract under an airdrop, the empty your crypto wallet. When accepting airdrop contracts, try to be careful.

Advantages and Disadvantages of Cryptocurrency Airdrops

When you understand how airdrops operate, you will notice the advantages of cryptocurrency airdrops and the disadvantages of cryptocurrency airdrops. Bringing an airdrop out for publication comes with some obligations. Some company that value the coin can call alerts to users. Others may device other marketing strategies to make there airdrop better.  

The chairman of CoinDesk advisory board, Michael J. Casey, made a blog. In the blog, he claimed that there are cryptocurrency beneficial promotions.  

He said : “A currency is nothing if it is not widely used. It can’t be achieved unless people make some cost-incurring effort to encourage widespread usage.”

There is also a warning on crypto airdrops. A lot of airdrop projects are pump-and-dump schemes. The owners increase their values. This makes people to engage in it. Once the owners make much profit, they drop the value.  

The actual advantage of cryptocurrency airdrops is, it diversifies your cryptocurrency wallet. Meaning, you can possess different virtual coins. The major disadvantage is, the pump-and-dump scheme. This is a form of cryptocurrency airdrop scam.

More on Crypto Airdrop

Obtaining crypto airdrops require patience and diligence. If you possess this qualities, surely you must earn from crypto airdrops.

When airdrop projects mint tokens and send out, the hope for more engagements from benefactors. The reason isn’t for benefactor’s benefit, but for awareness on the new project.

To earn an airdrop, you must perform certain tasks . They are:

  • Following an account on social media.
  • Sharing of their posts, including hashtags.
  • Sending or receiving a transaction (using a particular crypto platform or wallet).
  • Creating an account and signing up to receive updates.

Rarely, people earn crypto airdrops for free. We shall review that below.

FAQs

Why do crypto airdrops exist?

The main aim of a cryptocurrency airdrops is to create awareness of a virtual coin or token.

Note that, cryptocurrency  airdrops are never for investment. So, no crypto airdrop will  ask you to make any investment.

How do crypto airdrops work and are they safe?

Cryptocurrency airdrops operate in different ways:  

  • Users completing certain social tasks.
  • Automatic sharing of tokens wallets with a certain balance.  Example, for every address with a balance of 0.009 ether or higher gets the airdrop.
  • Taking a blockchain snapshot. Then allowing user claim the tokens from the project’s website.  

Not all cryptocurrency airdrops are safe. Although it may seem as free money, but some are scam. Most times, they are pump-and-dump schemes.

There is also another form of airdrop scam, called dusting attack. A scammer attaches defrauding contract code to the airdrop. Once a user accepts the contract in the airdrop, it hacks the wallet.

In the United States, having airdrops is same as an income. That means, for any free token you receive, you must pay tax. The U.S. Internal Revenue Service, approved it.

Examples of Crypto Airdrops ?

OpenDao’s airdrop. Users do not complete any task. Instead, the manually claim the token from the website.  

Another example is Gas DAO airdrop.  It operates on Ethereum blockchain. In Gas DAO, voting rights are provided by the GAS token. This serves a voice for active users of Ethereum network.   

Another airdrop is LOOKS airdrop. LooksRare team powers the airdrop. When you get the airdrop token, you receive a share to trade on LooksRare platform. This are the examples of crypto airdrops.

How can you become eligible for a crypto airdrop?

There is no specific requirement to be eligible to participate. Every crypto airdrop has its unique requirements. Below are some of steps to be eligible:

  • Choose a dedicated crypto airdrop website.
  • Always look out for social media with the #airdrop hashtag.
  • Your action on different cryptocurrency platforms should be regular.
  • Check out platforms and news about cryptocurrency.

Amongst this, the most important requirement is having a cryptocurrency wallet with a balance.

One of the most popular wallets to use is MetaMask.

CONCLUSION

“Airdrop” in a cryptocurrency space, is refers the dispersal of a virtual coin or cryptocurrency to the public. The sole purpose of cryptocurrency airdrop, is to promote the coin. This will make a lot of people have it, thereby increasing its awareness.

I believe you have understood all about airdrop in cryptocurrency. Also, the advantages and disadvantages  of cryptocurrency airdrops with the examples of crypto airdrops. Now you know how airdrop functions, you can carry out more research on it.

See the List of things to learn.
  1. Blockchain Technology
  2. Defi
  3. NFTs
  4. DAOs
  5. Crypto
  6. Web 3.0
  7. Altcoin Tokenomics
  8. Metaverse
  9. Smart Contracts

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