What is an airdrop?

Brief summary

✔️ An airdrop is a marketing strategy where you get free coins through which the cryptocurrency wants to create more awareness or acceptance.

✔️ In an airdrop you often have to do things for a company, such as promote on different channels, if you provide proof of this you get some coins.

✔️ Be aware of the risks in participating in airdrops, such as scams and high transaction fees.

What are Airdrops?

As a just starting company in the cryptocurrency world wants to become known can do so in several ways.

Early airdrops: the ICO

In the past, the ICO (initial coin offering) was hugely popular. It raised a lot of money. People lined up to acquire as many coins as possible from each new project as quickly as possible.

At one point, there were so many scam icos and worthless companies established that people became a little more cautious. Advertising networks like Google or Facebook were also no longer eager to promote the next flop.

First airdrop: Auroracoin

The first airdrop was the Auroracoin in 2014 from Iceland. Every resident of Iceland received 40 or so of this coin. The intention was for this coin to become usable in the economy because of the bad experience they had there with banks in 2008.

In the world of crypto, however, things often don't go the way you hope. A pump and dump occurred and the price collapsed completely.

The concept was born then, though, and a lot of airdrops followed. All kinds of websites even deal with this exclusively, since there are so many. Here is an example.

So in an airdrop, you get free coins from a cryptocurrency that wants to generate more awareness or acceptance and use of the coin. It is a marketing strategy.

How does an airdrop work?

In general, you can say that in an airdrop, you have to do all sorts of things to keep the coin raise awareness.

Airdrop and social media

For example, you will be asked to promote the coin on Twitter, Telegram or other social media. If you provide proof of your actions, you will receive a certain number of free coins in return.

For a predetermined period, the airdrop runs and after that you can usually sell your coins. It is rare that the coins you received are worth hundreds of euros, but it is possible. For example, UniSwap gave you coins that at one point were worth even thousands of euros.

Usually, however, this is not the case. Therefore, the intention is not to get people a lot of money, but to give them a modest amount for promoting the coin.

If you want to participate in such an airdrop, you can go to the above website to see if there might be an interesting one.

What should you look out for in an airdrop?

Many airdrops do cost you time, but yield virtually nothing. It may be free, but it does take time. Time is money and so you may be losing money!

So you actually have to start sifting. Which one do I want to participate in and why?

Airdrops and potency

First of all, you will have to ask yourself if the coin has a working product in the future and if that is popular enough to rise substantially. A coin that will be the basis for a DEX (decentralized exchange) has much more potential than a coin that represents some fuzzy concept.

If you look at the roadmap, the team and the white paper, you can also already make a pretty good estimate of the value of a project. A well-designed website already shows a lot of the strength of the team behind the new coin.

Airdrops and the hidden costs

You also have to be very careful about information you get. For example, there may be people who ask you to give them your private keys of your wallet. Since you don't know exactly how everything works you might give those and they will empty your wallet.

If you participate in an airdrop on the Ethereum blockchain, it may very well be that selling the coins costs more gas fee than the value of your coins.

You will also have to ask yourself whether acquiring coins is worth that much effort to you. For example, some coins have promotions that take you a very long time.

Conclusion

Airdrops are interesting if you know which promising projects to participate in. If you have seas of time you may be able to participate in most of them, where sometimes you can get lucky.

For those with a large network, airdrops can be very lucrative because referrals are often used.

For start-up companies, airdrops are sometimes indispensable, as this way they can market themselves at minimal cost.