An airdrop in the cryptocurrency space is a promotion that includes sending coins or tokens to a crypto wallet to spread the word about a new virtual currency. It allows more people to trade the new virtual currency when it gets listed on an exchange like an initial coin offering (ICO).
Startups mainly use the crypto airdrop – so some bitcoins or tokens are sent to active crypto traders for free or in exchange for a promotional benefit.
An overview
Airdrops are commonly promoted on the company’s website and cryptocurrency forums. The coins are sent just to present holders of crypto wallets, usually bitcoin or Ethereum. In order to be eligible for the free gift, a recipient might need to have a minimum amount of crypto coins in the wallet.
They might also be required to perform tasks like posting promotional content on social media or connecting with a certain member of the blockchain project.
There are good and bad crypto airdrops. So, beware and stay away from pump-and-dump schemes. A genuine crypto airdrop will not seek capital investment in the currency, and its aim is just promotional. But some crypto scams send micro amounts of bitcoin or any other cryptocurrency to random gullible recipients – this is called a dusting scam. Thus, you must always be vigilant about random unasked deposits into your crypto wallets.
The good and the bad
There is a lot of competition among cryptocurrency startups. An airdrop is done with the aim of being visible amidst all the buzz and competition. A few organizations send notifications to marketing agencies to tweak their airdrops before it’s sent to users. While there are great ethical organizations, there are bad ones that scam people in this space as well.
Many financial experts believe that some sort of marketing is required for cryptocurrency to reach out to every corner of the world. However, others believe that crypto airdrop can turn into a pump-and-dump scheme where the owner can artificially increase the value to lock in a quick profit.
Thus, you must be vigilant to avoid scams like instant pre-mining of tokens, trading pre-mined tokens to pump price and ‘giveaways’ of the tokens.
