What is an airdrop?

Key indicators

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

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

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

What are airdrops?

If a newly starting company wants to become known in the cryptocurrency world, there are several ways to do so.

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 some point there were so many scam ICOs and worthless companies set up that people became a little more cautious. Advertising networks like Google or Facebook were also no longer keen on promoting the next flop.

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 useful in the economy, because of the bad experience they had there with banks in 2008.

However, in the world of crypto, things often don't go the way you hope. There was a pump and dump and the price completely collapsed.

The concept was then born and lots of airdrops followed. All kinds of websites even deal with this exclusively, since there are so many. Here you can see 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. Simply put, it is a marketing strategy.

How does an airdrop work?

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

For example, you are 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.

During 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 dollars, but it is possible. For example, UniSwap gave you coins that at one point were even worth thousands of euros.

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

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

What should you look for in an airdrop?

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

So you basically have to start scoping. Which ones do I want to participate in and why?

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

You also have to be very careful with information you get. For example, there may be people asking you for your private keys to your wallet. Since you don't know exactly how everything works you might give them 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 will cost 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 cost you a lot of time.

Conclusion

Airdrops are interesting if you know which promising projects to join. If you have plenty of time you may be able to participate in most of them, sometimes getting lucky.

For people with a large network, airdrops can be very lucrative.

For start-up companies, airdrops are sometimes essential, as it allows them to market themselves at minimal cost.