Cryptocurrency was always a disruptor. It’s about disrupting centralized financial systems and handing back the power of money to the people. For this reason, it’s hardly a surprise when the space shows the world how to do other things in entirely new ways.
The crypto market is changing the way we view marketing. While the average traditional startup will create a compelling advertising campaign, its counterpart in the crypto world will give away free money – in a process called airdropping – in a bid to get people talking about it. And clearly, it works, since for the past few years now, airdrops have become a mainstay in the crypto world.
In this guide, we tackle everything you need to know about airdrops, including the scams you should stay on the lookout for.
What’s an Airdrop?
An airdrop, in the crypto sphere, is a marketing/promotional technique that involves sending free coins/tokens to community members in a bid to promote a new currency. These coins are sent either for free or in exchange for a favor such as posting about the new project, writing a blog post, retweeting a post by the project, and so on.
An airdrop’s end goal is to spread awareness about their project and hopefully get lifelong fans, as well as more traders, during the initial coin offering.
History of Airdrops
Tracking the history of airdrops leads you to Auroracoin (AUR), a crypto that was designated for the country of Iceland. The word ‘airdrop’ started featuring in cryptoverse when the project’s team announced an issuance period starting on March 25, 2014. Citizens of Iceland that had a permanent resident ID could register on Auroracoin’s official website and receive 31.8 AUR. At the time, AUR was worth $385 (compared to today’s $0. 037180).
After Auroracoin, many other upcoming crypto projects followed the airdrop approach, distributing crypto for free. Even already established projects occasionally use this approach so as to increase or revamp community engagement. For instance, Decred airdropped 258000 DCR in 2016 to community members, while Stellar (XLM) distributed freely 19% of their total coin supply to Bitcoin holders.
How to Participate in Airdrops
You can take part in airdrops whenever you want. To get started, you’ll need the following:
- A cryptocurrency wallet
- Base Tokens
- Access to Information
#1. Cryptocurrency Wallet
A cryptocurrency wallet is a device, software program, or app that lets you store, send, and receive cryptocurrencies. A crypto wallet is not one in the traditional sense. Instead, it holds your public and private keys through which you can conduct crypto transactions. Trezor and Ledger are some of the most popular crypto wallets.
#2. Base Tokens
Base tokens are so-called because they are the ‘base’ of many cryptocurrencies out there, either by being built on top of them or by forking off of them.
Examples of base tokens include Bitcoin, Ethereum, and EOS. If you’re looking to participate in an airdrop, you need to have at least two or all of these cryptos. Base tokens naturally have high liquidity, so you’ll have no trouble laying your hands on them in most major exchanges. Bear in mind that the amount of free coins you will receive will depend on the number of your base tokens (the more you have, the bigger the airdrop, with the reverse being true).
#3. Access to Information
Not long ago, the only way you could stay on top of upcoming airdrops was to religiously follow chats on crypto forums. Thankfully, you can keep track of them way easier now.
These days, we have sites and social media forums dedicated to just airdrops. To take advantage of them, start with the following:
- Follow relevant Twitter and Facebook accounts
- Join relevant Telegram channels
- Join online social forums that talk about airdrops
- Follow relevant Twitter accounts
- Utilize services such as Airdropaddict or Icodrops – which will keep you updated on all upcoming giveaways
Types of Airdrops
Airdrops do not follow alike or uniform protocols. There are different types of airdrops, each requiring its unique approach. Some of the common ones include:
- Standard airdrop
- Bounty airdrop
- Holder airdrop
- Hardfork airdrop
- Exclusive airdrop
#1. Standard Airdrops
To qualify for a standard AirDrops, you need to sign up for a newsletter and start receiving updates on the project. All you need to do is enter your name and email address.
#.2 Bounty Airdrop
These are airdrops that require you to perform a certain activity in order to qualify. The activity could be writing a blog post, tweeting/retweeting about the project, and so on.
#3. Holder Airdrop
These are airdrops for individuals who hold a particular cryptocurrency. E.g., an Ethereum-based project will airdrop Ethereum coins to your Ethereum-holding wallet.
#4. Hardfork Airdrop
These are airdrops targeted towards the original coin holders of a coin’s hard fork. E.g., an Ethereum airdrop on Ethereum Classic holders.
#5. Exclusive Airdrops
These are airdrops on the loyal/VIP club for a particular project. Such members may qualify for an airdrop that the rest of the crypto community is not privy to.
How to Prevent Getting Scammed
Just like with anything concerning money, airdrops have attracted scammers looking to exploit innocent investors. If you’re looking to participate in an airdrop, then you need to watch out for these kinds of scams:
- Private key scams
- Information trolling
- Bait and switch
#1. Private Key Scams
Your wallet’s private key is like your bank PIN for traditional finance. You wouldn’t give away your PIN number, would you? It’s the same with your private key. If an “airdrop” asks you for your private key, then you know straight away it’s a scam. For anyone to send you crypto, they need your public/key address only. Avoid like the plague anyone asking you for your private key.
#2. Information Trolling
Obviously, airdrops have some of your personal information like email address, Twitter/Telegram handle, and so on. Scammy airdrops will accumulate this information and sell it to marketers – without your consent. The result is these marketers will spam you with endless content. In a worst-case scenario, the airdrops will try phishing you. To prevent such scenarios, do thorough research on any potential airdrop to establish its legitimacy.
#3. Bait and Switch
This is an airdrop scam in which, when signing up for an airdrop (usually fake), the party will try to get you to sign up for another one. The objective of the scammer is to profit from that other airdrop. Such a scammer may even try to get you to sign up for scammy, pump, and dumpsites. These kinds of scams may not cost you money, but they are a massive waste of time. If an airdrop asks you to do any of the above, know that it’s fake.
Airdrops are a win-win formula for all the parties involved. Upcoming crypto projects can give away tokens for free and publicize their product this way. They can also cultivate a loyal base. And community members who receive airdrops get to walk away with a pretty penny for free. Of course, beware of scammers who are looking to take advantage of unsuspecting investors in the guise of an airdrop.