The term “Airdrops” have been floating around the crpyto world a lot lately and most people don’t seem to know what it means.
The cryptocurrency world has its own unique vocabulary which is expanding as the market evolves over time. In this article, cryptocurrency airdrops will be explained in detail.
What are Airdrops?
Airdrops can be defined as the process whereby a cryptocurrency enterprise distributes cryptocurrency tokens to the wallets of some users free of charge. Airdrops are usually carried out by blockchain-based startups to bootstrap their cryptocurrency projects. Also, established blockchain-based enterprises like cryptocurrency exchange platforms and wallet services can also carry out airdrops as well.
One of the most well-known examples of an airdrop is when a hard fork of Bitcoin, Bitcoin Cash, gave current Bitcoin holders an equivalent amount of Bitcoin Cash. At the time of the airdrop, if you were holding 0.4 Bitcoin, you were one of the many lucky receivers of 0.4 Bitcoin Cash. With Bitcoin Cash currently valued at $2,469.36 USD, that sounds like a pretty sweet deal!
How it works
For blockchain-based startups, they mostly favor the route that involves pre-airdrop announcements to get the buzz going. Since the aim is mostly to bootstrap the project, the airdrop process usually involves the completion of a number of tasks by the user in order to qualify for the airdrop. When the date of the airdrop arrives, the enterprise will release the free tokens to the users who qualify.
In marketing, awareness is often one of the initial steps in a buyer’s journey. As with the grocery store example, psychology plays a crucial role in the aspects of an airdrop, as a buyer is much more likely to purchase a product they are familiar with than a product they know nothing about. Therefore, those in charge of distributing the tokens see an airdrop as a key opportunity to give you a taste of their tokens. Compared to alternate forms of costly advertising (such as Facebook Ads), airdrops are often a more effective approach to showcasing coins.
Reasons for Carrying Out an Airdrop
From creating hype and buzz around a new blockchain-based enterprise to rewarding loyal customers, there are a number of reasons why a cryptocurrency airdrop is carried out. The following are some of the reasons for carrying out a cryptocurrency airdrop.
· As a Reward for Loyal Customers
From time to time, blockchain-based services like cryptocurrency exchange and trading platforms, wallet service providers etc. wish to give back to their customers and subscribers. Airdrops can be used as a means of rewarding loyal customers with free cryptocurrency tokens. This serves as an incentive that can assure continued patronage on such platforms. This type of airdrop mirrors the voucher and discount giveaways of non-blockchain companies in the mainstream commercial world.
In 2017, the cryptocurrency exchange platform, Binance, carried out an airdrop of 500 TRX cryptocurrency to account holders on the platform. The airdrop lasted from the end of October 2017 to the middle of November 2017. In order to qualify for the airdrop an account holder needed to have at least 0.003 BTC in addition to having completed at least one transaction on the account. Binance account holders who had the equivalent of 0.003 BTC in other cryptocurrencies were also eligible for the airdrop as long as they fulfilled the transaction requirement.
· To Generate Lead Database
Marketing is all about leads. Organizations tend to pay a lot of attention to generating appropriate leads that will drive their marketing campaigns and increase patronage. Airdrops can be used by blockchain-based enterprises to generate valuable lead databases for their organizations. In exchange for free cryptocurrency tokens, users will be asked to complete online forms that contain valuable user information which can be used to develop targeted marketing strategies. This application of airdrops to generating lead databases can even be utilized by none-blockchain enterprises.
· To Create Awareness About a New Cryptocurrency
With the sheer size of the cryptocurrency market, a new cryptocurrency can go completely unnoticed if it isn’t given the right boost in terms of substantial marketing campaigns. Just like every other aspect of the digital world, hype and buzz play an important role in the cryptocurrency ecosystem. With many cryptocurrency enthusiasts looking for new cryptocurrency options, an airdrop is a great way to get people interested in a cryptocurrency.
The marketing campaigns on social media for an airdrop can lead to increased attention being paid to a new cryptocurrency. Word of mouth advertising and other forms of organic engagements brought about by an impending cryptocurrency airdrop can lead to increased user participation in the cryptocurrency. This can help to bootstrap a new cryptocurrency as seen in the case of Bitcoin Cash. After the Bitcoin fork that led to the creation of the Bitcoin Cash, the developers of Bitcoin Cash carried out an airdrop rewarding all of its users. For every bitcoin held by a Bitcoin Cash participant, the developers gave a corresponding amount of Bitcoin Cash. The end result was that in less than one month, Bitcoin Cash was among one of the top 10 cryptocurrencies in the market.
How to Get Involved in Airdrops
Many sites and online groups are dedicated to informing users of upcoming, past, and active airdrops. Icodrops and Airdropalert, for example, show a list of upcoming airdrops. They also advise you on how many days are left before they take place and what currency you need to hold at the time of each one to receive the coins.
Another way to inform yourself of an airdrop is to simply keep up to date with the various social media accounts of each project.
Getting involved in airdrops requires access to information and the ownership of a cryptocurrency wallet to receive the free coins. What you would need to do is to sign up for online services that provide timely information about cryptocurrency airdrops. These include websites, Twitter accounts, Telegram groups, as well as online cryptocurrency airdrop forums. Some examples of such online services include Airdropaddict and Icodrops. These services provide vital information that will help users stay informed about upcoming cryptocurrency airdrops.
They also provide information on the qualifying criteria for participating in the airdrops.
What Wallets Do I Need?
Usually, airdrops occur on the Ethereum or Bitcoin blockchain and all you need is an account on an exchange. However, those in charge of the airdrop will sometimes state a specific wallet that’s needed such as an “ERC20 non-exchange wallet”. If you’re new to cryptocurrency, you may not know what this exactly means and that’s ok, we’re here to help.
What ShipChain means by a non-exchange wallet is simply a wallet that isn’t located on exchange sites such Binance or Coinbase. Reputable non-exchange wallets include Exodus and Jaxx.
An ERC-20 wallet simply means any wallet that supports the Ethereum blockchain system. Some tokens follow Bitcoin protocol, some follow Ethereum, etc. Therefore, it’s important to have a wallet that allows you to store ERC-20 tokens if that’s what the airdrop guidelines call for. MyEtherWallet (MEW) is a popular ERC-20 wallet.
Getting a cryptocurrency wallet is an essential part of being in the cryptocurrency market and that applies for airdrops as well. It is a good idea to get an ERC20 compatible multicurrency wallet since the majority of the cryptocurrency tokens in the market are ERC20 tokens. When participating in airdrops, it is important to be security conscious so as to not fall a victim of fraudulent airdrop campaigns. Some airdrops are designed to hack wallets and steal private keys. Always confirm the authenticity of a cryptocurrency airdrop campaign before participating in it.
Most importantly, make sure you are visiting the official site of the project when researching airdrops. A good way to filter out scam sites is to visit the official social media pages and find a post which links you back to their website. As stated before, the cryptocurrency market is currently unregulated and the potential for fraud and coin theft is high. Reputable blockchain projects will not ask you for private wallet information beyond your wallet’s public address. Never give out your private keys to ICOs who claim to “need it” for your airdrop to be delivered. Identity theft and hacking attempts are prevalent in the cryptocurrency community, and you do not want to be a victim when proper measures can be taken.
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