- October 12, 2021
- Posted by: admin
- Category: Blog
So, you’ve heard of your friends talking about some huge cryptocurrency airdrop soon, and something about free money? That sounds too good right? Well, kinda, but not really.
Before we begin, we have to disclaimer that this is not financial advice.
What is an Airdrop?
No, it’s not that kind of an airdrop. According to Investopedia, an airdrop, in the cryptocurrency business, is a marketing stunt that involves sending coins or tokens to wallet addresses in order to promote awareness of a new virtual currency. Other reasons for airdropping highlighted by Masterthecrypto include an alignment of interests, a sign of appreciation, alternative obtaining mechanisms, and fair token distribution. In other words, cryptocurrencies can be airdropped to raise awareness, bypass legal restrictions, or just genuinely out of gratitude.
Over 80% of airdrops occur on the Ethereum network, which isn’t all that surprising considering how many ICOs also occur on that network. Most of the time, those airdrops occur as a marketing strategy to garner attention and hence gain investors towards their new tokens.
Types of Airdrops
Airdrops generally come in three categories that can be further split: Bounty Airdrop, Holder Airdrop, and Hard Forked Airdrops.
A bounty airdrop is by far the most common type of airdrop nowadays. Bounty airdrops involve some kind of action on your part to participate, such as by joining a Telegram group, following accounts on Instagram, Twitter, Facebook and other social media platforms, or retweet, like or repost some post on social media platforms. Bounty airdrops are usually employed in a mass marketing strategy to explosively increase awareness of a certain coin or token.
A holder airdrop is what it sounds like: a certain number of holders get to receive the airdropped coin or token. A holder airdrop usually occurs more than once, and is used to incentivise current holders to keep holding the token, and potential investors to buy in and hold the token.
A hard forked airdrop occurs when a blockchain is split. A hard fork refers to when a certain blockchain permanently splits, either due to dissatisfaction with the functionality of the current blockchain, or to radically change a blockchain’s protocol. When a hard fork occurs, members may be airdropped the new coin directly into their wallets. One of the most notable hard fork occurred when Bitcoin split into Bitcoin(BTC) and Bitcoin Cash(BCH).
Dangers of Airdropping
At this point you may realise that you’re not paying a cent, so it can’t be dangerous right? Well, not really. One very overlooked danger of airdropping is disclosing your personal data. Some bounty airdrops may come in the form of “go to this website, fill out this personal particulars form and good luck!”. However, you’re disclosing potentially sensitive information to people that you don’t know, such as your address, date of birth, or identification numbers. Another common danger of airdropping is actually a hidden airdrop scam. What we mean by that is that the “developer” may ask for an amount of money in return for more tokens than that money is worth. Do you see where we’re going with this? Yeah, they’ll just grab the money, say thank you very much, and you’ll never hear from them again.
How to stay safe during an Airdrop
The first rule is to trust your instincts. An airdrop sounds too good to be true? It probably is, then. Slight tingle in your stomach that this “developer” doesn’t seem to have a portfolio backing them? Well… your gut instincts are probably right. Another solid rule which may seem obvious to many, but sadly not all, is to never pay for an airdrop. Even if it’s a relatively small amount of money, say $50, you can pretty much kiss that money goodbye. Why risk your hard earned cash and trust someone you don’t know that they’ll stay true to their word and reward you for your investment? Thirdly, never disclose overly sensitive information. Your name and email are fine, but if they start asking for your address, date of birth and social security number, then you’re definitely revealing more information than a stranger on the internet should know. A bonus tip to stay safe is to use a burner email account and crypto wallet. Even though you lose some tokens in gas fees when transferring a legitimate token into your main wallet, it’s still better to lose some free tokens than to risk transparency of all your assets for a couple of dollars worth of coins.
Always be wary of phishing scams during airdrops, and exercise extreme caution and scrutiny, especially when a particular airdrop sounds a bit too enticing.
How to Participate in an Airdrop
Now that you know how an airdrop works and a few risks associated with it, you may be eager to participate in the next big airdrop. To find an airdrop, you can do something as simple as Googling “ongoing airdrops” and take note of those on credible sites. CoinMarketCap and EthereumScan are two big hosts of airdrops, but due to the decentralized nature of cryptocurrencies, it is impossible for them to verify that all the airdrops on their site are safe, so always exercise caution even on these trustworthy sites.
What Airdrops Should You Participate In?
Assuming you’ve taken all the steps to be a safe airdropper, including the basic know-hows, which airdrops should you participate in? It really depends on you, but you should usually participate in airdrops backed by promising projects. Most promising crypto projects lack a wide enough community, so they may employ airdrops to create exposure that’s not necessarily just to let people know their name, but to hope that people understand the potential of the project and invite more people to invest in it, such as TripCandy!
We hope that you’ve learned something from this basic starter list for airdropping. We wish you good luck for the future airdrops you participate in, and always remember to stay safe!