Airdrop is a type of marketing strategy that involves sending multiple tokens or coins to crypto wallet addresses in exchange for completing small tasks, such as posting a message on social media. This is usually done to raise public awareness of the new cryptocurrency.
In the world of cryptocurrencies, airdrop is a marketing gimmick in which tokens or coins are sent to blockchain wallets. Most often, this is done to promote a new token or cryptocurrency.
This is usually done at no cost to the recipient. Sometimes this is done randomly, or the recipients are deliberately chosen after the initial publicity for the upcoming broadcast.
Recipients may be required to do something to promote the digital asset themselves, such as retweeting. The popularity of airdropping increased during the boom of cryptocoins in 2017.
However, there is an important difference between airdrop and Initial Coin Offering (ICO). If the participant himself contributes capital for its promotion, then this becomes an ICO, not an airdrop.
They have proven to be an extremely effective way to promote digital assets and continue to be so to this day. As a result of airdrops, participants are often incentivized to collect more coins or tokens.
This often leads to an amplifying effect when the hype around a coin or token drives up its value. Ethereum is also being used as a way to create loyalty among participants, with more assets being issued to the participants with the most assets in subsequent Ethereums.
However, they divided opinions in the crypto community. Some associate airdrops with spam, which has resulted in some social networking sites now not allowing ads promoting them.
In addition, scammers have taken advantage of their popularity and set up fake airdrops to steal funds from unsuspecting members. To combat this threat, websites such as airdrop alert have been created that list only legitimate coin and token airdrops.
There are three types of airdrops:
- Cash Drop: This is the most common type of airdrop and is used to promote and create buzz around a new token or coin.
- Airdrop for holders: This is done in order to reward holders of a particular token or coin for their loyalty. Therefore, the recipient is required to own the relevant token or coin at the time of the airdrop.
- Airdrop fork: This occurs when a blockchain is forked, such as when Bitcoin Cash was forked from the Bitcoin blockchain in 2017. In a fork airdrop, participants must hold the coin of the cryptocurrency that was before the fork, and then in the airdrop they are given coins of the new fork cryptocurrency.
The first airdrop in any form can be traced back to 2010 and the first bitcoin faucet. At that time, the reward was 5 BTC for participants who completed certain tasks.
While this may seem incredible given how much one bitcoin is worth today, it was only worth a fraction of that amount at the time. Bitcoin faucets still exist, but it's no surprise that the rewards offered are well below 5 BTC.
In 2017, Stellar Lumens (XLM) held an airdrop, the only condition of which was that the participant had bitcoin. About 19% of the total supply of tokens was distributed. In 2018, another 125 XLM were issued, worth $000.