What Is a Cryptocurrency Airdrop?

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.

Small amounts of the new virtual currency are sent to the wallets of active members of the blockchain community for free or in return for a small service, such as retweeting a post sent by the company issuing the currency.

KEY TAKEAWAYS

• A crypto airdrop is a marketing method employed by startups in the cryptocurrency space.

• It involves delivering tokens to the wallets of current cryptocurrency traders, either for free or in exchange for a small promotional service.

• The airdrop is meant to spread awareness and increase ownership of the currency startup.

• While some are legitimate, other airdrops have been seen as fraudulent or scammy.

Understanding Cryptocurrency Airdrops

The airdrop is a promotional activity typically performed by blockchain-based startups to help bootstrap a virtual currency project. Its aim is to spread awareness about the cryptocurrency project and to get more people trading in it when it lists on an exchange as an initial coin offering (ICO).

Airdrops are generally promoted on the company's website, as well as on cryptocurrency forums, and the coins or tokens are sent only to current holders of crypto wallets, usually those of bitcoin or ethereum.

To qualify for the free gift, a recipient may need to hold a minimum quantity of the crypto coins in their wallet. Alternatively, they may need to perform a certain task, such as posting about the currency on a social media forum, connecting with a particular member of the blockchain project, or writing a blog post.

A legitimate crypto airdrop never seeks capital investment in the currency. Its aim is purely promotional. On other hand, some crypto scams involve sending micro amounts of bitcoin or other cryptocurrencies to unsuspecting recipients in what is known as a dusting scam. Users should always be vigilant about unsolicited deposits into their crypto wallets.

Advantages and Disadvantages of Cryptocurrency Airdrops

Given the extreme competition among cryptocurrency startups, an airdrop is an attempt to stand out from the crowd. Some businesses devoted to crypto airdrops offer alerts to users and listing services to startups, plus a range of marketing services to fine-tune their airdrops. As always, there are good businesses and bad in this space.

Michael J. Casey, Chair of CoinDesk's advisory board and an advisor at MIT's blockchain research initiative, argued in a post on a CoinDesk blog that some type of marketing is essential if a cryptocurrency is to succeed. "A currency is nothing if it is not widely used. And that can't be achieved unless people make some cost-incurring effort to encourage widespread usage," he wrote. Disadvantages

However, there have also been warnings about cryptocurrency airdrops from others in the industry. For example, Pierre Rochard, the founder of Bitcoin Advisory, tweeted a caution that crypto airdrops can be pump-and-dump schemes. That is, owners of the cryptocurrency could be artificially inflating its value in order to make a quick profit.

Rochard tweeted: "Watch out for give away scams like this: 1. Instantly pre-mine tokens for yourself and your friends 2. Trade the pre-mined tokens with each other to pump price 3. Bait retail investors with a 'give away' of the tokens 4. Retail evangelizes the token for you, dump." What Was the First Crypto Airdrop?

The first cryptocurrency airdrop is attributed to AuroraCoin (AUR) on March 25, 2014. Intended to be the cryptocurrency for the nation of Iceland, every citizen or permanent resident who submitted their national ID received 31.8 AUR.3

Similar to other types of crypto airdrops, an NFT airdrop credits NFT holders with additional tokens. This is done to build a stronger community around certain NFTs, create buzz, and reward NFT holders.

Yes. To encourage Bitcoin adoption as the country expanded its legal tender to Bitcoins, El Salvador credited everyone who installed the government-built wallet with $30 worth of BTC. Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.

SPONSOREDTake Your Trading to The Next LevelA better you is within reach, and it all starts with City Index. Trade 6,000+ markets and enjoy instant execution, tight spreads and powerful tools to bolster your trading proficiency. Powered by the scale of a Fortune 100 company, StoneX, City Index is the ideal place to master the market forces.

Standard airdrop

In a standard airdrop, tokens are distributed for free and you do not have to perform any particular actions. All you have to do is create an account somewhere and then give your wallet address. There may be only a certain amount of tokens available for the airdrop, so you need to get there early.

These crypto airdrops are hugely popular because you can participate easily and it is free crypto because of this. To distribute the tokens fairly, the distribution can take place via a draw. In this case, you have a chance to win free crypto, but you are not guaranteed to win the airdrop.

Bounty airdrop

With bounty airdrops, you can receive rewards for completing tasks. These tasks take a fair amount of work, so the price you pay for free cryptocurrency tokens consists of energy and effort. Often the tasks are not difficult but are valuable for a crypto project. This is why new projects are increasingly choosing this method of token airdrops.

Holder airdrop

With a holder airdrop, you can receive cryptocurrency tokens if you hold a certain number of tokens of another cryptocurrency. The amount of your airdrop is determined based on a snapshot. At a certain moment, a snapshot of your crypto wallet is made. This moment is often a fixed date, but it can also be during a certain period. Based on the amount of tokens in your wallet, you can expect to receive a certain amount of cryptocurrencies.

You can find upcoming crypto airdrops in several ways. Of course, you can consult search engines like Google, and several websites have mapped out the current airdrop offerings. Often you can find not only airdrops in progress, but also upcoming airdrops.

Some websites do not show questionable airdrops in advance because they do not want to risk their reputation. Some platforms indicate the extent to which they trust the airdrop in question. Regardless of the opinion of an airdrop website, it is still wise to do your research and pay close attention to an airdrop.

In addition, there are often crypto platforms that launch airdrops for people who have used the platform in the past. These people then become eligible, without knowing it beforehand. To qualify for possible airdrops, you can start using swap platforms. When you use swap platforms that are built on a blockchain with low transaction fees, you can qualify for an airdrop very cheaply.

Are crypto airdrops safe?

Often crypto airdrops seem harmless and safe, but this is not always the case. Scammers have also found ways to scam people through airdrops. They have found ways to harm crypto enthusiasts by taking away cryptocurrencies or private keys.

Stay alert and pay close attention to airdrops, especially when high amounts are promised that are too good to be true. It is important to remember that it is never wise to connect your crypto wallet to an untrustworthy party or give up your private keys.

There have even been fraudulent airdrop actions where scammers deposited cryptocurrencies. These tokens turned out to be fake and were unsaleable. To make sure you don't become a victim of a scam, it can be useful to research the team behind the crypto project and find out what others think.

What Is a Cryptocurrency Airdrop?

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.

Small amounts of the new virtual currency are sent to the wallets of active members of the blockchain community for free or in return for a small service, such as retweeting a post sent by the company issuing the currency.

KEY TAKEAWAYS

• A crypto airdrop is a marketing method employed by startups in the cryptocurrency space.

• It involves delivering tokens to the wallets of current cryptocurrency traders, either for free or in exchange for a small promotional service.

• The airdrop is meant to spread awareness and increase ownership of the currency startup.

• While some are legitimate, other airdrops have been seen as fraudulent or scammy.

Understanding Cryptocurrency Airdrops

The airdrop is a promotional activity typically performed by blockchain-based startups to help bootstrap a virtual currency project. Its aim is to spread awareness about the cryptocurrency project and to get more people trading in it when it lists on an exchange as an initial coin offering (ICO).

Airdrops are generally promoted on the company's website, as well as on cryptocurrency forums, and the coins or tokens are sent only to current holders of crypto wallets, usually those of bitcoin or ethereum.

To qualify for the free gift, a recipient may need to hold a minimum quantity of the crypto coins in their wallet. Alternatively, they may need to perform a certain task, such as posting about the currency on a social media forum, connecting with a particular member of the blockchain project, or writing a blog post.

A legitimate crypto airdrop never seeks capital investment in the currency. Its aim is purely promotional. On other hand, some crypto scams involve sending micro amounts of bitcoin or other cryptocurrencies to unsuspecting recipients in what is known as a dusting scam. Users should always be vigilant about unsolicited deposits into their crypto wallets.

Advantages and Disadvantages of Cryptocurrency Airdrops

Given the extreme competition among cryptocurrency startups, an airdrop is an attempt to stand out from the crowd. Some businesses devoted to crypto airdrops offer alerts to users and listing services to startups, plus a range of marketing services to fine-tune their airdrops. As always, there are good businesses and bad in this space.

Michael J. Casey, Chair of CoinDesk's advisory board and an advisor at MIT's blockchain research initiative, argued in a post on a CoinDesk blog that some type of marketing is essential if a cryptocurrency is to succeed. "A currency is nothing if it is not widely used. And that can't be achieved unless people make some cost-incurring effort to encourage widespread usage," he wrote. Disadvantages

However, there have also been warnings about cryptocurrency airdrops from others in the industry. For example, Pierre Rochard, the founder of Bitcoin Advisory, tweeted a caution that crypto airdrops can be pump-and-dump schemes. That is, owners of the cryptocurrency could be artificially inflating its value in order to make a quick profit.

Rochard tweeted: "Watch out for give away scams like this: 1. Instantly pre-mine tokens for yourself and your friends 2. Trade the pre-mined tokens with each other to pump price 3. Bait retail investors with a 'give away' of the tokens 4. Retail evangelizes the token for you, dump." What Was the First Crypto Airdrop?

The first cryptocurrency airdrop is attributed to AuroraCoin (AUR) on March 25, 2014. Intended to be the cryptocurrency for the nation of Iceland, every citizen or permanent resident who submitted their national ID received 31.8 AUR.3

Similar to other types of crypto airdrops, an NFT airdrop credits NFT holders with additional tokens. This is done to build a stronger community around certain NFTs, create buzz, and reward NFT holders.

Yes. To encourage Bitcoin adoption as the country expanded its legal tender to Bitcoins, El Salvador credited everyone who installed the government-built wallet with $30 worth of BTC. Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.

SPONSOREDTake Your Trading to The Next LevelA better you is within reach, and it all starts with City Index. Trade 6,000+ markets and enjoy instant execution, tight spreads and powerful tools to bolster your trading proficiency. Powered by the scale of a Fortune 100 company, StoneX, City Index is the ideal place to master the market forces.

Standard airdrop

In a standard airdrop, tokens are distributed for free and you do not have to perform any particular actions. All you have to do is create an account somewhere and then give your wallet address. There may be only a certain amount of tokens available for the airdrop, so you need to get there early.

These crypto airdrops are hugely popular because you can participate easily and it is free crypto because of this. To distribute the tokens fairly, the distribution can take place via a draw. In this case, you have a chance to win free crypto, but you are not guaranteed to win the airdrop.

Bounty airdrop

With bounty airdrops, you can receive rewards for completing tasks. These tasks take a fair amount of work, so the price you pay for free cryptocurrency tokens consists of energy and effort. Often the tasks are not difficult but are valuable for a crypto project. This is why new projects are increasingly choosing this method of token airdrops.

Holder airdrop

With a holder airdrop, you can receive cryptocurrency tokens if you hold a certain number of tokens of another cryptocurrency. The amount of your airdrop is determined based on a snapshot. At a certain moment, a snapshot of your crypto wallet is made. This moment is often a fixed date, but it can also be during a certain period. Based on the amount of tokens in your wallet, you can expect to receive a certain amount of cryptocurrencies.

You can find upcoming crypto airdrops in several ways. Of course, you can consult search engines like Google, and several websites have mapped out the current airdrop offerings. Often you can find not only airdrops in progress, but also upcoming airdrops.

Some websites do not show questionable airdrops in advance because they do not want to risk their reputation. Some platforms indicate the extent to which they trust the airdrop in question. Regardless of the opinion of an airdrop website, it is still wise to do your research and pay close attention to an airdrop.

In addition, there are often crypto platforms that launch airdrops for people who have used the platform in the past. These people then become eligible, without knowing it beforehand. To qualify for possible airdrops, you can start using swap platforms. When you use swap platforms that are built on a blockchain with low transaction fees, you can qualify for an airdrop very cheaply.

Are crypto airdrops safe?

Often crypto airdrops seem harmless and safe, but this is not always the case. Scammers have also found ways to scam people through airdrops. They have found ways to harm crypto enthusiasts by taking away cryptocurrencies or private keys.

Stay alert and pay close attention to airdrops, especially when high amounts are promised that are too good to be true. It is important to remember that it is never wise to connect your crypto wallet to an untrustworthy party or give up your private keys.

There have even been fraudulent airdrop actions where scammers deposited cryptocurrencies. These tokens turned out to be fake and were unsaleable. To make sure you don't become a victim of a scam, it can be useful to research the team behind the crypto project and find out what others think.