Crypto

Understanding Airdrops in just 3 minutes – ₿log

In traditional marketing, it is customary to receive free samples when a new product (perfume, cream, new dessert, etc.) is launched. In this case, these are cryptocurrencies. The startup, development team or community behind the project will offer free cryptocurrencies to certain users.

What exactly?

This term “airdrop” for “drop” in English refers to a promotional operation. This materializes through the distribution of digital assets among investors. In most cases, in order to take advantage of this offer, simply owning an altcoin token or having an active portfolio address in a particular block chain is enough. It is also possible that this airdrop is in exchange for a small favor (retweeting a message sent by the issuing company, posting a comment on a forum, etc.).

The best examples in this area are reference platforms such as Binance, Kraken or FTX, which reward their users from time to time for their loyalty and use of their services. Therefore, these exchanges regularly organize the distribution of cryptocurrencies.

How to use Airdrops?

Knowing how to find eligible projects to qualify for is a practice that takes time, but some dedicated crypto airdrop sites offer user alerts and referral services for startups and new projects.

  • Coinmarketcap offers a list of current or upcoming airdrops.
  • On social networks such as Medium (by request #testnet), on Twitter (by request #airdrop).
  • SEO sites like airdrops.io, airdropalert, coinairdrops or even airdropaddict.

Airdrops.io website homepage with various airdrop operations offered

What is it used for?

These cryptocurrency promotion operations provide liquidity to the project. This adds to the attractiveness of the protocol and initiates further development and results.

Similarly, it is an incentive to come and test the protocol on the blockchain in the testnet. That is, when it is still in testing and not available to the public. It’s a way for developers to patch code so that it’s fully functional when opened to the public (mainnet).

Read also Solana (SOL): 5 Fundamental Things You Must Know Before Thinking About Investing in SOL

Airdrop also finds its usefulness in strengthening NFT raising projects. In this case, the creators of these projects want the value of their NFTs to be maintained over time, they will offer the NFT holder to receive an airdrop of other NFTs. A good way to increase the size of the community and add value to the ecosystem.

What are the advantages and disadvantages of airdrops?

Airdrop is generally a win/win operation for both investors and crypto project initiators.

  • This is a good way to make sure the offer is well distributed and not focused on the wallets of developers and a few investors.
  • Unlike ICO, the project team retains control over decentralization by evaluating the total number of eligible wallets and the flow of distributed tokens. Conversely, during an ICO, large investors can concentrate a large number of cryptocurrencies, which creates management problems.

As with any cryptocurrency mechanism, there are dangers here too.

  • Victims of their success, airdrops can attract a lot of scammers. Including false projects aimed at emptying the investor’s wallets.
  • It is usually necessary to register in advance to take advantage of the airdrop. Therefore, it is necessary to be vigilant with regard to the transferred personal information and signed documents.

Conclusion: Should we give in to temptation?

This is an alternative to trading to increase your portfolio without spending a dime. But besides the free accumulation of cryptocurrencies, airdrops have several advantages. This allows, above all, to discover new projects, protocols and learn how to use them.

However, as always in the crypto ecosystem, security is paramount. Preliminary analysis of the file is required. You have to go to specialized websites that list and select projects with a selector lever.

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