Crypto airdrops: here’s everything you need to know

• The crypto airdrop is a marketing technique deployed when launching a crypto project.
• There are mainly three types – prime, exclusive and holder.
• The crypto market is also riddled with scammers and there is a need to be on high alert against “pump and dump” schemes.

This is not your typical Apple airdrop where you receive audios, images and video clips in a jiffy. Crypto airdrop is a marketing technique, mainly used to promote a particular crypto product or project. The word “airdrop” means that small amounts of cryptocurrency are sent to users’ wallets for free or in exchange for a small, usually promotional, service.

A country’s native cryptocurrency is usually distributed to users for free for the purpose of promoting the currency or creating buzz on social media. If one tunes in and connects to the word “Airdrop” on Twitter, there are a plethora of projects popping up on screen, each promoting their own agenda.

When did crypto airdrops become popular?

It was documented that the first crypto airdrop happened on March 25, 2014. AuroraCoin (AUR), which was to be the cryptocurrency for Icelandwas dropped, with each citizen who submitted their national identity card receiving AUR 31.28.

Crypto airdrops became very popular around the time of the initial coin offering phase that began in 2017. Airdrops were used to increase circulation of the currency before it went public. They have been instrumental in legitimizing crypto projects. Airdrops do not require any personal investment from customers.

Types of airdrops

There are mainly three types of airdrops – prime, exclusive and titular. While a bounty airdrop requires you to promote or complete certain tasks associated with the project, an exclusive airdrop is only sent to designated users. These customers must either be an early supporter of the project or a member of an active community associated with it.

This was done by the recent adopter of Bitcoin, El Salvador – where citizens received $30 worth of BTC for each citizen who downloaded the government wallet.

Holder airdrops distribute free tokens to wallets containing a certain amount of digital currency. If the balance meets the minimum project requirement, they can claim the said tokens.

How do crypto airdrops work?

Airdrops are usually distributed on Ethereum and Binance Smart Channels. These require users to have a certain amount in their wallet or promote the business.

Even if users follow all the steps, there is no guarantee that they will have access to the tokens of the projects being promoted. Often the project only gives access to users who have been with the project before a particular date. As is the case with all marketing tactics, crypto airdrops have their pros and cons.

The Two Sides of Crypto Airdrops

The crypto market is also riddled with scammers and there is a need to be on high alert against “pump and dump” schemes. These projects contain a lot of hot air and although airdrops never ask for crypto investments, some scam projects steal your wallet when you claim or transfer free tokens. A special precaution should be taken when connecting your wallet to the airdrop site.

In October 2020, Binance the chain suffered what is called a “dust attack”. After sending tiny amounts of bitcoins to multiple addresses, a link to a malicious website was left in the transaction memo, causing unwary users to click the link to receive it. Wallets are susceptible to attack and airdrops are a means to an end.

It is necessary for users to ensure that the project they are investing in has been thoroughly researched and discussed beforehand. If the founders are well known and can be held accountable on social media, that helps tremendously. While airdrops are effective in marketing a crypto product and cultivate a sense of decentralized ownership, one should watch out for possible fraud.