What You Need To Know About Crypto Airdrops
What are crypto airdrops and how to get airdrops? This article explains all you need to know about airdrops in crypto.
What is a crypto airdrop?
A cryptocurrency airdrop is a distribution of digital assets - coins and tokens - to wallet addresses of users in a bid to promote awareness of a new coin or token. It is similar to companies sending out free trial invites or discount codes for the launch of their new product.
In the case of crypto companies and blockchain projects, small quantities of a new digital currency are “airdropped” to the wallets of members within the crypto ecosystem; usually in return for carrying out a small promotional task. An example of such a task could be joining a telegram group or retweeting a post put out by the currency creators. Occasionally, the coins or tokens are given to users for free.
The major reason for cryptocurrency airdrops is to increase awareness or ownership of the token or coin in question. It also helps increase trading potential when the virtual asset is listed on an exchange as an initial coin offering (ICO).
How do crypto airdrops work?
There are several ways crypto airdrops are carried out.
Here are some of the ways:
- The owners of the new cryptocurrency project can automatically distribute coins or tokens to users that are holding a specific asset or balance amount on the blockchain where the airdrop will take place. For example, every user that has a balance of 0.05 sol or more will receive the airdrop.
- A blockchain snapshot can be taken at a previous date and users can be allowed to collect their airdrop tokens from the company/project website via a smart contract.
- Users will have to complete several small tasks to qualify for the airdrop that will be sent out at a stated later date. For instance, you could be asked to join a telegram group, follow a particular twitter account and retweet a pinned tweet. Once you complete these tasks, you would have to enter your wallet address and wait for the airdrop date to receive a stated coin or token amount.
Are crypto airdrops safe?
Regardless of their popularity within the blockchain and cryptocurrency ecosystem, crypto airdrops have their issues. For one, they can be used to carry out pump-and-dump schemes. A pump-and-dump scheme is where owners of the cryptocurrency project artificially inflate the value of their token or coin to make a fast profit. They can do this by hiring Twitter or Instagram influencers to “hype up” a particular token or coin to increase its value. Once the value is high enough, these influencers and scammers sell the asset, disappear with the profit and leave everyone else at a loss.
One of the recent examples of this scam happened in July 2021 where a group sold coins based on the Netflix show Squid Game. Regardless of the fact this group had no official or valid relationship with Netflix or the show creators, many people bought into the hype and purchased huge amounts of the coin. As expected, the coin value shot up. It went from a penny to $2800 and crashed back to pennies in the space of minutes. At the end of the day, the group made $2 million while the rest of the coin holders lost money.
Another scam that goes on in the airdrop sphere is called a “dusting attack.” A dusting attack is an attempt by scammers to break the privacy of cryptocurrency users by sending small amounts of coins to their digital wallets through an airdrop. These small amounts of coins are known as “dust”. They are usually so tiny that many users don’t notice them. However, “dust” can also refer to very small amounts of coins that are left in user accounts after trading orders are completed.
In this context of airdrops, dust being found in your wallet could mean you have been a victim of a dusting attack. After the dust is sent to different accounts, the scammers would try to link the dusted address to individuals or companies in an attempt to carry out cyber-extortion or phishing attacks.
One more airdrop scam to look out for is the one that requires users to “invest” a particular coin amount to receive twice or thrice of what they put in. A legitimate airdrop will never ask for any sort of capital investment before sending out coins or tokens. In addition, if you are asked to input or share your wallet private key before the airdrop will be sent, it is most likely a scam. Never share your private key with anyone.
How to find crypto airdrops
Crypto airdrops are generally used for marketing and user acquisition, and new coins/tokens spring up every other day, which means there’s almost always an airdrop happening in the crypto community. Bear in mind however that every airdrop has a different requirement for interested users to meet before they can receive the particular token or coin. With that being said, here are some ways you can find crypto airdrops:
- Check Twitter, Reddit and other social media for the #airdrop hashtag regularly to see if any new drops are happening. To make it easier, you can follow the hashtag on Twitter or Instagram so it shows up on your timeline or feed whenever you’re online.
- Actively use different cryptocurrency platforms, products and services.
- Join cryptocurrency-related groups or forums on Reddit, Telegram, Quora or whatever social platform you frequently use, to receive notifications about upcoming airdrops.
- Find crypto airdrop websites like airdops.io, airdropalert.com and sign up for their emails to receive daily, weekly or monthly airdrop notifications.
The fundamental requirement for receiving crypto airdrops is having a functional cryptocurrency wallet. This is because you need to enter your wallet address on whatever platform (like twitter, telegram, e.t.c) the airdrop is being shared through.
Obiex offers an easy way to set up your crypto wallet so you don’t miss airdrops. Simply download the app from the Google Play store or the App Store and start receiving cryptocurrency today.
Disclaimer: this article was written by the writer to provide guidance and understanding of cryptocurrency trading. It is not an exhaustive list and should not be taken as financial advice. Obiex Finance will not be held liable for your investment decisions.