Found Money: Understanding Cryptocurrency Airdrops
Have you ever stumbled on a $20 or $100 bill floating around with no owner in sight? Did you pocket the cash and treat yourself? That is a bit like an airdrop. Recently popular with blockchain projects, an airdrop is a deposit of cryptocurrency into a wallet where the owner of the wallet isn’t aware of the deposit.
What? Free money! It’s true. Cryptocurrency has seen incredible growth. The value of bitcoin alone reached $19,000 last December, and has since corrected and retraced. Cryptocurrency has a total market cap of $330 billion.* There are currently some 1500 cryptocurrencies with new tokens and coins launching daily. As the numbers grow, interest in crypto is swelling.
When a new token or coin launches, the blockchain project behind it is often supported by an ICO or initial coin offering. An ICO is a public sale where you can purchase the token or coin at a fixed price. To ensure the ICO is successful, the project will distribute airdrops before the ICO sale begins in addition to other marketing efforts.
How does it work? At a pre-announced time, the project will take a snapshot of the blockchain and airdrop a certain number of free tokens to anyone holding crypto. For ethereum based projects, recipients would need to hold some ETH. Projects based on the bitcoin blockchain, recipients would need to have some BTC.
Some projects target popular addresses to build awareness about their token or coin. Others offer airdrops, often of nominal value, to anyone with a wallet for sharing a post on social media, signing up for a newsletter, or promoting the ICO. For most people, it works like so. You find a project, agree to share the project with your network, provide your public wallet address, and receive an airdrop during a predetermined time frame, usually after the close of the ICO.
Airdrops are the latest way blockchain projects are building awareness around their token or coin. Foundations and educational initiatives are using airdrops as a way to inform the public about crypto and blockchain technology.
Check your wallets, you might find some free money. If not, follow Airdrop Alert to keep up with upcoming airdrops.
Crypto Protip: Beware of scam airdrops trying to steal your crypto. Never give out your private keys or wallet file.
