If you’re relatively new to the crypto markets, you’ve probably had a friend or two talking about the latest airdrops they were a part of or the free coins that just showed up in their wallet one day. These airdropped coins that everyone is claiming are free cryptocurrency have many people confused and wondering how this process works.
So here’s everything you need to know about how airdropping coins works, why a blockchain company would issue an airdrop, and what the potential benefits are of participating in an airdrop.
What is an Airdrop?
An airdrop for cryptocurrency is when a blockchain company distributes a portion of their coins and tokens for free to the participating crypto community. Typically in order to qualify as a recipient of an airdrop for free tokens, you need to have coins from the related blockchain stored in a wallet.
Blockchain companies that build on top of another blockchain platform, like Bitcoin or Ethereum, will issue these airdrops as a marketing tactic and PR stunt to get coins and tokens in as many hands as possible.
The process usually happens like this: the company issuing the airdrop with image the particular blockchain at a specific moment, for example, the Bitcoin or Ethereum blockchain. Any wallet addresses that hold the related Bitcoin or Ether coins will be distributed a relative number of the airdropped tokens.
This can be done using other blockchain platforms as well, it just so happens that Bitcoin and Ethereum are still by far the most popular.
Another way you might qualify for a cryptocurrency airdrop is to perform tasks related to the blockchain company that help its development or marketing efforts. Some companies offer free cryptocurrency when users sign up for their service and share the company’s information or link on social media platforms.
Other times blockchain companies will simply accept user information forms that request email, Telegram follow, Twitter account and wallet address in order to participate in the airdropped coins. This airdrop format is gaining traction as a marketing tool for new companies that want organic press.
Why would a blockchain company give away free coins?
At this point, you might still be asking yourself, “Why would a company just give away free tokens that supposedly have a lot of value?” And that’s a great question…
There are a few reasons why blockchain companies are taking advantage of airdropping their coins as free giveaways.
Marketing: The popular reason for the latest wave of airdrops hitting the streets is for a grassroots marketing and PR effort for new blockchain companies. Many of these companies see the marketing struggles, especially on a tight budget. Offering their initial community and users a special perk for believing in the product and company is a great marketing effort to reward the early adopters. Ideally, the people who participate in the airdrop are the primary users and community the company is trying to build around.
Creating a distributed ecosystem of a company’s coins and tokens is another huge reason why some blockchain companies are opting for the airdrop strategy. When a blockchain company decides to do an Initial Coin Offering (ICO), there is a chance that a small number of investors buy up a majority of the coins and skew the decentralized and distributed nature of the blockchain. Dispersing a small supply of coins to a large number of people ensures that the bulk of the coin supply doesn’t end up with a few select investors.
Dovetailing on the last point, if there are many holders with coins then there might be more liquidity in the market when the company lists the coin on public crypto exchanges. If a few people hold the coin, they might be long-term holders and create a liquidity problem when the coin is trading in the future.
Another idea behind getting a small number of coins in a large number of hands is that it attracts users that wouldn’t have otherwise used the service or had a specific reason to buy the coins. People who receive free coins naturally investigate and see what value they bring, which drives more attention and awareness to the particular cryptocurrency. If the airdrop recipients like the project and coin, they might actually buy more or start using the blockchain service.
Why should you join an Airdrop?
As a cryptocurrency trader, investor and user, there are plenty of reasons to find new blockchain companies and participate in their airdrops for free coins. Similar to the reasons that blockchain companies want to give away free coins, users should be happy to receive coins gratis.
Obviously, there is the notion that the coins are free and usually require minimal effort to participate in the airdrop offering. If you think the blockchain company has a good potential service, and you might want to use it in the future, then getting in on an airdrop is the perfect scenario. It’s basically like getting your first meal free at a restaurant. You receive some coins to use on the company’s service when it’s ready and see if you like the product and experience.
Additionally, airdrops ensure a more decentralized and distributed token ecosystem, which is a good thing for all parties involved in a particular cryptocurrency community. On top of that, you might even encounter new blockchain projects you’ve never heard that you want to use and be a part of.
What are some examples of airdropped coins?
One recent example of a successful airdrop was with OmiseGo. The blockchain company distributed a large number of tokens to wallets holding Ethereum shortly after completing their ICO. in the case of OmiseGo, they said, “we believe that tokens are most useful when they are as widely distributed as possible. In the case of a permissionless proof-of-stake (PoS) network, especially one running a very economically valuable decentralized exchange trading both cryptocurrency and real-world money, a wide distribution is also critically important for network security.”
Another example is the Oyster Shell airdrop, which is a token supporting the Oyster Protocol and Oyster Pearl coin. For this airdrop occuring, users holding PRL coins on the crypto exchange KuCoin will receive SHL tokens in the airdrop, as well as people who hold PRL on wallets like MyEtherWallet.
Where do ou find airdrops to participate?
Airdrops aren’t usually a major surprise anymore. Some companies will announce their airdrop as a marketing effort through press releases with online crypto media publishers. Others promote the airdrop on their website and reward users for joining the platform, creating an account, and sharing with their social media followers.
There are different groups on Facebook or Telegram that keep tabs on a list of upcoming airdrops and related ICOs. Joining and following a few of these groups is a good way to stay updated on these coin giveaways. Try the ERC20 Airdrops channel on Telegram, and the Crypto Airdrops channel on Twitter.
There’s also a host of websites that track upcoming airdrops as well. Check out the lists on:
Check out the available airdrops on the websites mentioned and see what it requires to participate in some of these various coin giveaways. Happy trading!