Beginners Guide to Crypto Airdrops: Free Coins & Tokens
If you’ve been wandering around the crypto sphere for some time, it’s highly likely you’ve heard about these free and “potentially lucrative” airdrops. If not, we’ll you’re in for a treat.
Airdrops are essentially free cryptocurrency tokens which are given to those who hold a base cryptocurrency for an extended timeframe.
If you’re like me, you’re skeptical of anything labeled “free”. There has to be a catch right? Well, not entirely. There’s always a catch to anything that claims to be free, which usually costs you in the way of time or information.
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How Do Airdrops Work?
In order to qualify for airdrops you’ll need to acquire and hold a particular cryptocurrency. Let’s call this your “base currency”. You’ll hold onto this base currency for an extended timeframe in order to acquire the new airdropped cryptocurrency (aka — tokens).
Think of it as a buy one get one free sale, except you’re not really buying anything, just holding onto a currency for an extended timeframe.
Some coins require you to hold a minimum amount of tokens in order to be eligible for their airdrop. Other cryptocurrencies will allow a 1 to 1 exchange without any minimum hold requirement. Airdrops are the ideal “scratch my back and I’ll scratch yours” type of scenario.
Let’s break this down even further and examine 3 reasons why these airdrops really work…
- Advertising: Many startup companies will announce airdrops in order to deliberately bring more attention to their main coin. In summary, it’s used as another form of advertising.
- Value: Airdrops are also a great way to temporarily inflate the value of the initial base cryptocurrency. As you can imagine, setting up criteria to hold one coin in order to receive another free coin typically works out for both parties in the end. Who doesn’t like free stuff, right?
- Time sensitive: In most cases there is a certain time period in which you must hold the base cryptocurrency. Once the airdrop is complete, you’ll no longer have to worry about holding onto the base currency.
- As you can imagine, this causes an “ebb and flow” type of situation, where the base cryptocurrency value dramatically dips just as soon as the airdrop has complete. This is why I highly recommend you sell as soon as this time period expires.
- PRO TIP: This would also be a great time to short if you margin trade.
Airdrops can literally “drop” free cryptocurrency into your digital wallet. The real question is, will these new tokens increase in value over time? No one really knows at the time of their release, however one things for sure, free is free so you have no room to complain, right?
How to Join an Airdrop
First of all, you need a wallet that can accommodate several different types of cryptocurrency. Most wallets will handle various ERC20 tokens which are suitable for these airdrops. Many of them are based upon the Ethereum blockchain.
Most cryptocurrency companies will require you to register on their website in order to qualify for the airdrop. Some will outline more specific conditions like…
- Joining their Telegram channel
- Joining their Discord chatroom
- Posting a comment or private message on a forum
- Re-tweeting a message from the company
Once you follow the outlined protocol, you’ll be required to hold a certain amount of cryptocurrency in your wallet. The requirements for wallet storage can vary from an online soft wallet like MyEtherWallet or one that resides on a cryptocurrency exchange like Binance.
Either way, the details are always announced from the originating cryptocurrency via email, forum, or twitter account.
Difference Between Automatic And Manual Airdrops?
A manual airdrop is one where you’ll follow the developers on social media. You’ll be requested to share a post, take a survey, or even fill out some forms. Don’t worry; these small tasks won’t take up too much of your time. It’s worth it in the end.
Automatic airdrops do not require you to do anything other than have an active wallet with the initial cryptocurrency coins on it. As mentioned earlier, your wallet should be able to hold ERC20 tokens which is based on the Ethereum blockchain.
Most crypto enthusiasts tend to hold these coins on their cryptocurrency exchange of choice. If you choose to go this route, make sure that you’re on a well-known, reputable exchange like Binance, Bittrex, or Coinbase.
Why Are Airdrops Worthwhile? Things To Consider…
Airdrops allow you to receive new cryptocurrency that you would have otherwise gone without. In the worst-case scenario, you receive a free coin that’s worthless and collects virtual dust inside your wallet. Either way, it cost you nothing.
Best case scenario, the value of the base currency and airdropped coin you hold increases. Inadvertently, you walk away with a “brag worthy” profit on both currencies without having to invest anything but a small amount of your time.
Be very careful though, as these airdrops are a beacon for the unscrupulous types. For instance, many fake twitter accounts have been created to resemble the official cryptocurrency company’s account. The scammer poses as a developer for the team and requests your wallets private key in order to send you the airdropped coins.
This is never the case for legit airdropped tokens. Private keys are never required. If this happens to you, immediately report the account to Twitter.
Another likely scenario are fake twitter accounts that post instructions for you to send cryptocurrency to a wallet address owned by the scammer in order to receive your free tokens. The official developers will never request tokens from you, so if this happens, again, report it to Twitter.
Apart from these rather easy to spot scams, airdrops can be very beneficial.
Take note that it may take some time in order for these coins to be released. A one or two month time frame is typical.
Conclusion
Airdrops are great way to acquire unknown cryptocurrencies without having to invest your own money. Not only do they serve the purpose of being an effective marketing tool for developers, but they’re a great way to broaden your cryptocurrency portfolio with little to no risk.
For the latest airdrop announcements visit AirDropAlert.com. The site releases upcoming and active airdrops on a weekly basis.
