AIRDROP UNSCRAMBLED – EVERYTHING YOU NEED TO KNOW
We’ve all had that moment when someone comes to tell us about a free product or service. The marketer ensures that we get really excited about their products and services, only for him/her to come up with a long list of terms and conditions, which at the end of the day, makes the product or service less interesting. That’s just how it is for most traditional business markets.
The cryptocurrency world, on the other hand, is quite different. A lot of traditional business rules do not apply to the crypto world and that is why it is possible to get some crypto tokens for free. Surprised? Well, don’t be. In this content, we’ll be telling you what these free cryptocurrencies, otherwise known as airdrops, are; how to get them, their value, how to store them, and lots more. In short, we’ll be providing you with every piece of information you need to know about airdrops. So without further ado, let’s get down to it.
WHAT IS AN AIRDROP?
While some of us who are familiar with the crypto world might have heard about airdrops but don’t know what they actually are, they are others who are newbies and are trying to get the necessary information they need before jumping on the airdrop trend. So what exactly are these airdrops you’ve been hearing all over the place?
Simply put, crypto airdrops are free tokens awarded to users of a specific blockchain currency, such as Waves, Ethereum, and Bitcoin. These airdrop tokens are usually awarded by their respective cryptocurrency enterprise.
Airdrops are usually done through snapshots or a simple registration process, and the selected users of the particular blockchain doing the airdrop get an equal amount of tokens. Additionally, blockchain-based enterprises that are well established, such as wallet services and exchange platforms, can give out airdrops as a way to reward their most loyal customers.
Airdrops are either announced before they are distributed or selected participants just see them in their wallets. These are the two ways in which airdrops are distributed. Most times, the crypto enterprise carrying out the airdrop distribute the tokens with no announcement. Users will just wake up one morning and see new coins in their wallets. Well, actually the process is more than that. At a particular period, the enterprise will take a snapshot of their blockchain at a pre-announced date and those holding the enterprise’s tokens or coins at the time of the snapshot will be the ones to get the free airdrops.
Another method used in getting airdrops is by inputting your details in a simple form. You can just log into your wallet and see a form asking for your email; you fill in your email and before you know it, you have new tokens in your account.
Basically, airdrops do not require that you perform tasks before being able to get your tokens.
WHAT IS THE DIFFERENCE BETWEEN AN AIRDROP AND A FORK?
So, you might probably have heard of hard forks being a way to get free tokens too. While this is true, crypto airdrops and hard forks aren’t the same.
Now, from what we defined above, you remember that airdrops are used as a form of reward for loyal clients and users, right? Hard forks, on the other hand, happens when a particular blockchain gets split in two. This implies that the code of the current block chain has been changed, therefore, creating two different blockchains that do not recognize each other’s transaction.
The split blockchain can now be referred to as the fork of the main blockchain. When this happens, the fork usually results in users of the main blockchain getting free or airdropped tokens.
The major cause of a hard fork is internal conflict. Hard forks usually happen when the developers of a blockchain cannot agree on something. Most times, the internal conflict between these developers are usually not resolved and this often leads to a group breaking off from the other to create a new cryptocurrency. This new creation is what is known as a hard fork.
WHY DO PEOPLE GIVE AWAY FREE TOKENS?
- Awareness – This is one of the major reasons why tokens are given out. Tokens are used to build hype around a new digital currency. With airdrops, giveaways, and bounties, the founders and teams of a project can bring more people to invest in their project. Bounties will also provide them with the benefit of getting massive social media following as participants will likely be asked to add their social media accounts and fill different forms before being able to qualify for the tokens.
*Note – Participants should be careful of airdrop sites, projects, or forms that require passwords, wallet private keys, and transaction signatures. These websites, forms or projects are usually scams.
- Ability to Identify Potential and Long-term Customers – Tokens also provide the team behind a project with the ability to know more about their users. With the information they garner from their users’ social media profiles, the project’s team can easily identify those who could help them build their community, invest in their projects, create awareness for their brands, and lots more.
- Fundraising – Airdrop tokens also serve as a venture to raise funds which will be used to further develop the current project and carry out future projects. Investors or participants will be given a particular amount of free tokens and asked to pay a particular amount of another cryptocurrency (usually Bitcoin, Ethereum, Litecoin, or Wave) to get more.
For instance, let’s say we have a project named plutocoin. We can airdrop 100 plutocoin for free and ask that investors should support our project with 1ETH. For their support, we’ll provide them with 10,000 plutocoin. The ETH provided to us by our investors will then be used to further develop our plutocoin.
The development includes getting listed on exchanges, building apps, creating a more responsive and faster website, making the blockchain more secure, making transfers faster, etc.
- Generate Leads – Airdrops are used as a form of marketing. A big blockchain-based firm can tell participants to fill in valuable user information in exchange for free tokens. This information will then be used to increase patronage and drive the company’s marketing campaign.
BOUNTIES AND AIRDROPS
Some time ago, startups in the crypto world came to the conclusion that when a lot of people have their tokens in their respective wallets, there’s a high chance of that token being valuable, and hence, the idea of airdrops and bounties was born.
Now, getting a high value for these tokens isn’t the only goal (though it is the primary goal), airdrops are also used as a form of marketing and advertising. How? Through bounties! Let us explain.- Contact Us
You see, when a startup tells the public that they are about to give out airdrops, they ensure that those who are going to participate in it do some simple tasks, which includes following them on social media platforms like Telegram, Facebook, Twitter, and LinkedIn, filling different forms, promoting them on social media, etc. They also tell participants to fill in their crypto wallets, such as an Ethereum or Wave wallet; this is where the tokens will be sent to depending on the platform used for the creation and distribution of the token.
Once the simple social media tasks have been carried out, participants are asked to bring in more people, otherwise known as referrals, in order to get more tokens. To make things better, the referral programs are usually juicy. So, as more people get into the system, more tokens are released, the startup becomes popular, and the tokens stand a high chance of becoming valuable when listed on exchanges.
This way, the startups enjoy no advertising costs, more token holders, and an increased chance of the tokens being valuable as people value the coins they have acquired than the ones they do not have. The participants also stand a chance of making free money when the crypto coins get listed on an exchange, everybody wins. A large number of the cryptocurrency community have confused this with being airdrops when in fact, they are bounties.
Now let’s make it clear.
- With bounties, startups either announce the date of when the tokens will be distributed or give the tokens out once the tasks are complete. Bounties usually involves tasks and they are used to gain free awareness, and get more investors. Bounties require continuous promotion. The more you promote, the more tokens you get.
- Airdrops on the other hand do not require tasks like bounties. Airdrops are given out as rewards, used to create awareness for a new project on the blockchain, and to generate leads.
RATIO AND SNAPSHOT
As said earlier, one way of getting airdrops is via snapshot. Snapshot is simply a data capture of the blockchain. Most times, when tokens are airdropped, they are distributed in a 1 to 1 ratio.
To make things simpler, let’s use an example. Let’s assume a user is registered to a blockchain-based firm and the firm is about to airdrop some new tokens, either as a reward or as a marketing strategy (it doesn’t really matter, this is just an example). The firm takes a snapshot of the whole blockchain at a specific block height (the numeric reference to the newest block) and distributes the token to its users in 1 to 1 ratio.
This means that if our user in the example has 100 of the firm’s main token at the time the snapshot was taken, he’ll get 100 of the new tokens. However, both tokens may not be of equal value.
DO AIRDROPS HOLD ANY VALUE?
Most airdrops do not hold an immediate value. What this means is that airdropped tokens take time before they become valuable as they are not immediately listed on coin exchanges. Additionally, most airdrops come from enterprises that have just finished their initial coin offerings (ICO). So the firm might want to focus on distributing tokens, building apps, making sure the blockchain and their network is stable for transactions, etc. before getting their tokens listed on exchanges.
In short, airdrops do not hold an immediate value. They can become valuable in the future, but not immediately.
HOW CAN I STORE MY AIRDROPS?
Airdropped tokens are usually saved on wallets that support their respective blockchains. This means that you can’t save a token created on the Ethereum blockchain in a Bitcoin wallet. It must be saved in an Ethereum wallet. For better security, it is recommended that you save your tokens in a cold storage or hardware wallet. This will prevent hackers from getting to your tokens.
WHERE CAN I SELL MY AIRDROPS?
Airdrops can be sold on exchange platforms. You’ll need to follow the announcements of the firm or startup you’re holding their tokens in order to know when they’ve been listed on an exchange platform.
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