The cryptocurrency industry holds new opportunities for investors and holders. One such an opportunity is an airdrop. We take a look at what an airdrop is and how you can benefit from an airdrop.
What is an airdrop?
A cryptocurrency airdrop is when the team behind a coin or project, gives free tokens to certain users. The word “airdrop” refers to these free tokens or coins being airdropped into your wallet or onto certain exchanges. It is mostly given to early adopters of a new project to raise awareness or to award loyal crypto holders. Airdrops can also happen during forks. For example, if you had Bitcoin in certain wallets or on some exchanges during a specific period, you were rewarded with fork coins. Examples are Bitcoin Cash, Bitcoin Gold and Bitcoin Diamond.
You may either receive an equal amount of free coins as the amount you currently hold or a 0.5, for example. It differs from project to project. It is important to note that there are different requirements for receiving these free coins. This can range from having to hold a specific crypto or sharing your Facebook contact list to compiling a small write-up. Either way, it is still free money!
Why do teams give away coins?
The reason teams give away coins is quite simple – for exposure and awareness. When you walk into a grocery store, you may find a table with samples of a new cheese or stain remover that is on offer at the particular store. The same applies to cryptocurrencies. Let’s take a closer look at the top three reasons why airdrops occur:
1. To create awareness and build a community
If you are given a coin, you will naturally want to know what you can do with it, how you can spend it and how much it is worth. By airdropping a new coin, the team entices the new holders to form a community, make the coin bankable and the value to appreciate. It has become very important in the crypto industry to create a buzz and hype around an upcoming project. Especially when there are so many Initial Coin Offerings (ICOs) being launched on a daily basis, it is important for marketing teams to draw as much attention as possible to their product.
Crypto investors are constantly looking for the next big ICO to fill their bags. These airdrops are often talked about on social media platforms and investors can even get rewarded for sharing content with friends and family who also invest in the project.
Besides, who wouldn’t want coins for free?
2. Loyalty rewards
Airdropping free coins is also a way for exchanges or wallets to reward loyal customers or holders. Back in 2017, Binance rewarded customers who had a certain amount of Bitcoin with 500 free TRX.
3. Data collection
Data is of great importance to most businesses as it gives them valuable insight into their clientele’s needs and mindsets. Gathering data is an age-old way of marketing a new product and if done properly, can make a product extremely successful. Cryptocurrencies are also products and marketing teams have to know what their customers want. It should come as no surprise that in this case, crypto holders may receive free coins in exchange for valuable marketing data. This can be done by either completing an online form or share your Facebook friends list. This data can help crypto start-ups to grow or expand.
How can I get free coins?
The first step would be to carefully read what the requirements are to qualify for the airdrop. For example, which wallets qualify and which currency must you hold?
These free coins will go straight to your wallet. The type of wallet required to qualify for a specific airdrop will be specified by the team behind the token. Remember to be careful and not provide an airdrop organization with your private key. Do your own research by going to the token’s website and social media pages to make sure that the airdrop is legit. Sometimes hackers or scammers will announce fake airdrops only to hack your account or steal your identity.
Sometimes, surprise airdrops occur but most of the time, an airdrop will be announced timely.
If you have fulfilled in all the requirements for the airdrop, the development team will take a snapshot of participants during a certain time. This is usually when a particular blockchain has been reached. Sometimes you will be allocated the coins automatically but other times you may have to go to the project’s website to claim the free tokens. You may even have to retweet or share a link on social media platforms.
Which wallets qualify?
To benefit from an airdrop, you may either need to have Bitcoin or Ethereum in an ERC-20 non-exchange wallet. An ERC-20 wallet is built on the Ethereum blockchain. This is a wallet that cannot be found on an exchange like Bittrex or Poloniex. You can consider getting the Exodus and Jaxx wallets and MyEtherWallet (MEW).
How do I find out about upcoming airdrops?
If you don’t already have Telegram, its time to download the app onto your phone. Telegram is by far the most popular platform for cryptocurrency talks. There are many groups dedicated to various aspects of the industry. There are two groups dedicated to airdrops. Search for Icodrops and Airdropalert in Telegram to stay on top of upcoming airdrops. They will even let you know how many days are left to get some free coins and what the procedure is to qualify for the airdrop.
What can I do with the free coins?
Hold on to the coins until it hits an exchange. Keep it safe until such time that you can trade with it. A second option is to hold the coins for the long term and use it when its gained in value.
Whilst there is plenty of money to be made in the exciting cryptocurrency industry, it is still unregulated. Be sure to check out the token’s website to verify that an airdrop is indeed occurring. Remember to never give your private key to anyone.