One way to market a new product or service is through advertisements online, billboards along the highway or through flyers. When a new crypto currency enters the market, the creators of this new crypto currency want to get as much attention for it as possible. The creators of this coin may organize an airdrop where free crypto is distributed to interested parties. The more people that get this crypto, the more famous this crypto currency becomes.
In this blog, I will discuss the phenomenon of the airdrop.
What is an airdrop?
An airdrop in the crypto sphere is a marketing campaign to bring a new crypto currency to the attention of the general public. New crypto currency is distributed to the public partly for free. This is an entirely new form of marketing.
An increasing number of companies are discovering the success of cryptocurrencies and want to join them. As a result, new cryptocurrencies are emerging all the time. By giving away a small portion of the coins, the underlying company hopes to generate enough attention so that there are enough interested people/potential investors who want to participate. In short, an airdrop is a marketing campaign to bring a coin to the attention of the general public.
How did airdrops originate?
At the end of 2017, there was a big boom in the awareness of cryptocurrencies and the crypto market. ICOs (Initial Coin Offerings) suddenly became popular and many new crypto currencies were added. Many of these crypto companies wanted to bring in a lot of money as quickly as possible. They therefore started to advertise a lot on the Internet. When it turned out that there were many rogue projects and many people were scammed, the advertisement providers became more and more strict. Many providers banned the advertising of cryptocurrencies (some providers have lifted the ban). Because many providers banned the advertising of cryptocurrencies, it became increasingly difficult to advertise. This created a new way of marketing, the airdrop. The airdrop became attractive because advertising did not have to go through a provider. Instead, sociale media platforms were used like Discord, Telegram, Instagram etc. to promote their cryptocurrency.
What does an Airdrop yield?
The value you receive can vary greatly. Often it is between $1 and $20. But it can also be more. It depends on the specific airdrop how much cryptocurrency you get. An Airdrop is often only available for a few days/weeks. If you weren't on time, you can't participate in an airdrop anymore.
What can I get out of an Airdrop?
It is a way to earn free money basically.
The goal of participating in an airdrop is to sell the obtained crypto with a profit on the crypto market. It is very important that this crypto is listed on an exchange where you can sell your crypto and other people can buy it. For this, you need an account/wallet from the exchange where the crypto will be listed. So you need to do some research beforehand to find out if and where this new crypto currency will be listed. Registering on an exchange is often easy.
Are crypto airdrops safe?
Many scams take place in the crypto world. Be warned! Below is a short list of tips you should consider before participating in an airdrop:
- Never give anyone access to your private key.
- Ask yourself who promoted the airdrop and if the source is reliable
- Never pay for an airdrop!
- Estimate the professionalism of the company behind the airdrop. Double check the persons who are behind it (LinkedIn, etc.).
- Check the whitepaper. If it contains a lot of grammar errors or claims they couldn't back up, think twice in investing in that airdrop.
- On what platform is the cryptocurrency going to be listed? Is it on a well known exchange like Coinbase or Binance? Or is it only listed on a decentralized exchange like Pancakeswap? If it is the latter, take extra caution.
- To conclude: investing in a new cryptocurrency is a big risk. A lot of scams are out there. An example is Mando coin or Squid Game Coin. Always double check the cryptocurrency's legitimacy.
Two types of airdrops
There are two types of airdrops:
- Surprise airdrop: companies that are already more established often choose this form of airdrop.
- Announced drop: new companies often announce an airdrop in advance. Announced airdrops and pre-airdrops are used to create a kind of buzz around a project. Announced airdrops are often announced on social media or via a newsletter.
Once the date of the airdrop has come, the company will give the free crypto to users who meet the requirements. Sometimes a user must already own some tokens, other times there are no requirements.
When do crypto airdrops take place?
How do you know when a crypto airdrop is happening? You will have to closely follow the news about certain cryptocurrencies. This can be a time-consuming process. That's why there are websites and tools available on the market that give you an update when an airdrop is about to take place.
A few websites:
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