What Is Crypto Airdrop?

Since the crypto space has been recognized as an economic tool capable of channeling venturers to their financial freedom, lots of crypto-related businesses and projects have been storming the industry, all finding their way to excel in the crypto market. As such, marketing has been considered as a very expedient activity all businesses including crypto-related must carry out to promote the recognition and adoption of their products to the targeted community. Thus, this calls for analyzing diverse possible measures that can aid the promotion process of a new or upcoming project. Among the common marketing strategies in the crypto space is crypto airdrop – a marketing strategy commonly leveraged by crypto startups and businesses to incentivize the adoption of their products.

Crypto Airdrop Definition

Crypto airdrop, as the term implies, is a marketing system concerned with distributing crypto tokens to the wallet address of a targeted community of crypto enthusiasts, in order to boost and encourage the adoption of a new or upcoming crypto project. This marketing strategy is very common to crypto startups to help them boost their growing process. Crypto airdrop is often offered in the form of a gift to attract the interest of new users to a platform, thereby promoting the project to a wider audience.

Every renowned crypto project began its operations as a startup. There is no doubt that the early stage of a crypto project is always challenging because they are only recognized by a handful of persons at this stage. These companies then seek to deploy possible measures that can help spike the recognition of their projects to a larger audience to enable them to maximize profit. Crypto airdrop has proven to be a very effective measure of raising awareness over the years.

Why Do Crypto Airdrops Exist?

The existence of a crypto airdrop is basically the result of the need to promote and aid the awareness process of crypto-related businesses including crypto startups, brands, projects, and the likes. The primary purpose of crypto airdrop is simply to accelerate the rate of interest surrounding the concerned project.

Thus, when tokens are airdropped, the holders tend to become more excited about the project, hence they become encouraged to raise more alarm on the project, thereby creating further awareness to a broader audience. As such, the team behind the project will be able to utilize the opportunity to encourage the recipients to help promote the project.

How Crypto Airdrops Work

Crypto airdrop works in diverse ways, the goal is to raise awareness to a wider audience. An intending project may announce plans for an airdrop program for its users while putting them on a condition to complete certain social tasks if they must qualify for the airdrop. This would place more relevance on the project as many would want to benefit from the airdrop and possibly inform an extra person on participating in the event. Most preferably, the project could airdrop crypto tokens to holders of a particular asset on the blockchain where the project is intended to launch.

Moreso, crypto airdrops can as well be conducted by taking a blockchain snapshot at a previous date and letting users claim their airdrop tokens from the project’s website through a smart contract. This will attract new interest, and the website will definitely experience a larger number of visitors.

Types of Crypto Airdrops

Although the goal behind every crypto airdrop is never beyond promotion purposes, the form in which the marketing strategy is performed varies. Below are some of the common types of crypto airdrops.

• Bounty airdrops. This is a type of crypto airdrop that requires potential recipients to engage in some promotional activity in order to qualify or get a chance to receive the crypto tokens to be distributed.
• Holder airdrops. This type of airdrop is concerned with distributing free crypto tokens to holders of a particular digital currency also having up to a specified balance in their wallet. The team behind the project often takes a snapshot of users’ crypto holdings to unveil holders who meet the minimum requirement; qualified holders can then claim their airdrops according to the directions of the team.
• Exclusive airdrops. This exclusive airdrop is a form of crypto airdrop that demands the intending project to send crypto tokens to a community of people within an airdrop aggregator. These airdrop aggregators function as intermediary sites that share news and information about upcoming airdrop events and the projects involved.

Crypto Airdrops vs ICOs

Crypto airdrops and initial coin offerings (ICOs) are both measures leveraged to boost the adoption of new crypto projects. However, crypto airdrops and ICOs are two different concepts with diverse modes of operation. As said earlier, crypto airdrops are a form of marketing strategy that involves the distribution of crypto tokens to users to raise awareness about a new project without requesting any form of investment. Meanwhile, ICOs are fundraising events conducted to raise funds from investors to finance a new crypto project.

Airdrop Scams

It is important to understand that not all airdrop programs are genuine, cases of airdrop scams are increasingly on the rise as fraudulent actors are hiding under the shade of crypto airdrops to rip people off their funds.

There have been several cases of malicious actors airdropping malicious tokens into wallets of random crypto holders, when these users try to send out the funds from their wallets, they realize that their assets have been ripped off completely.

There are also cases where fraudsters announce fake airdrop events to crypto users, leading to a phishing website, hence luring these users to connect their wallets with their malicious sites in an effort to wipe off their funds.

However, since it has come to the notice of the crypto industry that scammers are leveraging the idea of crypto airdrops to steal people’s funds, users are advised to make enough research on any crypto airdrop before making any attempt to participate.

Pros and Cons of Crypto Airdrops

Crypto airdrops have proven to be very advantageous to the crypto communities. However, there are also some downsides to crypto airdrops. Let us first have a look at the benefits a crypto airdrop provides:

• Crypto airdrops help to increase a user’s crypto portfolio without buying digital assets;
• Crypto airdrop is an effective aid to promoting the brands of crypto businesses;
• It offers users the opportunity to become early holders of a token that may excel in the future.

The drawbacks are noteworthy as well:

• Crypto airdrop becomes a time-waster when the airdropped tokens lose their value before holders could sell them off;
• It poses users to the risk of giving money or disclosing sensitive information to malicious platforms.

Conclusion

Crypto airdrops have proven to be a very effective marketing strategy adopted by new and upcoming crypto projects while also being beneficial to crypto enthusiasts who are able to participate in successful airdrops.

However, with the rate at which airdrop scams are increasingly accelerating, crypto users are thereby advised to carry out personal and rigorous research on airdrop events before they participate to prevent them from becoming victims of malicious airdrops.