How To Receive Free Tokens From Airdrops
While initial coin offerings (ICOs) have become the main method of distributing a blockchain projects newly issued digital token, another method has also emerged in recent months. This method is known as the Airdrop.
What Are Airdrops?
A cryptocurrency airdrop refers to the process through which the founders of a blockchain project distribute their digital tokens to the broader cryptocurrency community. These tokens are given without any monetary contribution from the person who receives them.
There are different methods that developers may use to carry out airdrops. The most common method used to conduct airdrops involves taking a snapshot of the relevant blockchain at a specific point in time and using that information to send tokens to the blockchain’s users. From the snapshot, wallets are picked that contain an amount higher than a predetermined value to send the free tokens to.
The time the snapshot is taken is usually announced beforehand through the project's communication channels such as social media, its website and Telegram chat group. Different projects will be built on different blockchains, so it is important to ensure you have the relevant cryptocurrency in order to take full advantage of airdrop opportunities.
While all airdrops are free in terms of financial contribution, some projects will expect something from those within its community who would like to receive the tokens. This method usually involves requiring the would-be airdrop recipients to do certain things in support of the project. These might involve sharing the project on social media sites such as Twitter or to contact the project’s team in order to show their interest in participating in the airdrop.
While most airdrops are carried out by blockchain projects after an ICO, there are also airdrops that come as a result of a hard fork on a blockchain. A good example of this would be last year’s bitcoin cash (BCH) hard fork where people who held bitcoin (BTC) in their wallets received an equivalent amount of bitcoin cash after the hard fork. Considering the market value of bitcoin cash, this was a good deal for all bitcoin holders who made use of the airdrop.
In addition to post ICO and hard fork airdrops, there are also those that occur when a company will decide to give tokens away to participators who meet certain requirements. A good example of this is the airdrop carried out by digital currency exchange Binance. The platform held airdrops for those who wallets held certain amounts of loopring (LRC) as well as for the wallets that bought Hshare (HSR). Moreover, Binance also “gifted” all its users, who had traded more than once and had over 0.003btc in their wallets, with 500 tron (TRX).
What You Need To Participate In An Airdrop
First, you need a wallet that supports the coin that is used by the blockchain project that is about to conduct an airdrop. Most projects will require you to have its official wallet, where you hold the private keys to your coins. Good examples of this are hardware wallets or certain online wallets. For this reason, most exchange wallets are unsuitable for airdrops as you are not in control of your private keys.
Next, it is important to consider the blockchain the project is based on as not all wallets support all coins/tokens. For instance, if the project is based on Ethereum and uses ERC20 tokens, then it is imperative to use wallets - such as MetaMask and MyEtherWallet - that support these tokens.
It is advisable to ensure you have a reasonable amount of the relevant coin so as to be included in the snapshot before the airdrop happens. If the project is not using the snapshot method, you will need to have social media accounts in order to fulfill the requirements set by the project’s airdrop terms. Some require Twitter accounts while others require Telegram, and so on.
The most basic requirement is a suitable wallet, however since different projects will carry out their airdrops in different ways, it is important to stay informed. If you come across information pertaining to an airdrop, ensure to visit the project's website or official social media in order to get the right information as well as all the relevant requirements.
Why Do Airdrops Happen?
Since airdrops are simply ways to distribute free digital currency, it is easy to wonder why blockchain projects would engage in this practice.
Firstly, it is a great way to advertise their project. The cryptocurrency space is inundated with an influx of new tokens and it is difficult for projects to differentiate themselves from each other in order to get ahead in the market. Giving free tokens to people ensures they reach a whole new set of people who may otherwise have not encountered the project.
Secondly, once a person receives a free token, they are more likely to conduct further research into the project as well as buy more of the token. This could lead to an increase in the token’s value on the market, which is a desirable outcome for all parties involved.
Furthermore, an airdrop may lead to a more active community who support the project. A robust community is beneficial for blockchain projects as they encourage token awareness through their social networks. The community may also contribute to the betterment of the project if it is open-source.
How To Stay Safe
While airdrops are a creative way to incentive crypto communities, they have not escaped the gaze of unscrupulous individuals looking to take advantage of others within the space. In order to safeguard your funds, ensure that you only participate in airdrops held by reputable projects and avoid projects that require you to send your private keys or need you to click on links that are wallet addresses.
Furthermore, real airdrops do not require you to send a small amount of tokens first to partake. Hence, if a project asks you to do this, be sure to conduct adequate research to ascertain their validity before transacting.
Airdrops are great way to get your hands on new digital tokens and to potentially generate some extra income should these coins appreciate in value. However, it is always important to stay vigilant and only partake in legitimate airdrops from reputable blockchain startups.