If you’ve been online long enough in the last two to three years, you must have come across the word “airdrops” very frequently, but what does it mean and how does it work?
Airdrops mean a lot of things to different people, depending on their levels of exposure to cryptocurrencies, their preferred mobile devices, or if they served in the military in the 60s.
Before the advent of crypto and blockchain, airdrop mostly referred to Apple’s proprietary service, which allows Apple devices to share files quickly.
Although before Apple launched the airdrop tech in 2011, it used to refer to reinforcement packages that dropped from planes to troops in remote areas during World War 2.
However, since the onset of cryptocurrencies in 2008, airdrops have become more widely known as a crypto marketing tactic.
The practice went mainstream in 2017 when countless crypto projects started coming out, and there was an issue with getting people to use so many coins. Founders of new coins/tokens decided to give out these coins to members of their virtual community or some selected people before they were released to the public.
Before getting the coins in their wallets, prospective receipts would have to perform some tasks which mostly create awareness for the soon-to-be-released coin.
Airdrops are basically crypto giveaways, and they are usually won via referral contests and community engagement.
How airdrops work
As earlier stated, an airdrop is an activity that blockchain startups use to promote awareness for digital assets (coins and other tokens like NFTs).
The aim is to drive awareness, get many people interested in the token and start using it before it gets listed on an exchange and the initial coin offering (ICO) ensues.
An ICO is the crypto equivalent of an initial public offering (IPO) of stock markets. A company that wants money offers its shares to individual investors to raise capital.
Investors can buy into a coin before it gets listed on a crypto exchange and becomes open to the public.
When coins get listed on exchanges, and their price values increase, investors who bought in on/before the ICO stand to gain the most.
Airdrops are usually promoted via crypto communities on Twitter, Discord, and Telegram. The tasks could be anything from being active in a Discord community to signing up for a newsletter to referring people to a Telegram channel to retweeting a tweet.
Once the task is completed, the competitors are asked to submit their blockchain wallets and given a date when the tokens will “drop” in the wallet.
Crypto airdrops can also be distributed by giving the coins to members of the community who have a certain amount of an already existing coin in their wallets.
Most crypto airdrops do not involve a financial investment. They are usually just a marketing stunt that helps get more eyes on a token and encourages widespread use.
When founders give out tokens in exchange for investments and fundraising, it is more of an initial coin offering (ICO) than an airdrop.
Why everyone loves airdrops
If you haven’t participated in one yourself, you must have been hit with links to airdrops by friends, colleagues, and even family members.
Most crypto enthusiasts love airdrops because if it turns out to be legit, it is actually “free money.”
Participating in airdrops is largely a game of numbers and luck. You could make a lot of money without spending a dime.
Many tokens turn out to be useless and have no value, but if you’re lucky enough, you will find a token drop that appreciates and just like that, you could be $5,000 richer overnight.
Who wouldn’t want that?
That’s why you might keep getting those links for the foreseeable future.
Some successful airdrops
Minting NFTs on the Ethereum Blockchain can be expensive due to gas fees, and Solana provided an escape due to its reduced value. Minting is the process of converting digital assets to a non-fungible token, an item on the blockchain with a unique identifier.
Solana gave out 35,000 SOL tokens via airdrop in multiple giveaways in 2020.
According to data from Statista, those coins were worth a dollar in 2020 and have now increased by over 1,000%, hitting an all-time high of $204 in November 2021, far more than they were worth when they were given.
Uniswap, the world’s most popular decentralized exchange (DEX), airdropped its native token, UNI, to all wallets that had used the platform and performed at least one transaction before September 2020.
The price of the token climbed from $2 to an all-time high of $43 in May 2021.
Such occurrences are regular and spread across the cryptocurrency sector.
What you need to start participating in airdrops
An internet-enabled device
Airdrops are digital events that occur on the web, and you need an internet-enabled device with an active connection to get involved in them. You also need to join internet communities to be aware of the opportunities when they drop.
A crypto wallet
To reap the benefits of an airdrop, you have to submit a wallet address. The wallet could be software or hardware; it doesn’t matter as long as it can receive cryptocurrencies. You can open a crypto wallet with numerous apps like Binance, Trust Wallet, or Metamask.
A social media account
Many airdrops involve internet engagement. If you’re not one for social media, you might need to rethink your decision. You’ll be asked to share, tag, comment, retweet, and like posts on social media to qualify.
Free time (a lot of it)
Airdrops require a lot of searching and scouring. There are always tight deadlines, and you need to perform all the tasks within the validity period. To do this, you would need a lot of time on your hands.
Risks around airdrops: What to watch out for
As much as they can make you a lot of money, airdrops can also make you lose money.
You can lose your already owned crypto in the search for airdrops. Some hackers send phishing emails in the form of airdrop offers. Clicking the link can lead to a loss of your private data.
The hackers can use that information to log in to your crypto wallets and steal your digital assets.
Some crypto platforms help you protect your assets by giving you a private key, usually a bunch of words, that you need before accessing your account from another device.
People searching for airdrops have fallen for fake airdrops that ask them to drop their private keys in exchange for tokens.
Never give your private key to another person except, of course, you trust them. It’s called a private key for a reason.
Send one and get two
Some airdrop scams will promise to give you double whatever you send to them; do not fall for that scam.
Airdrops are not supposed to require any monetary investment. More often than not, there’s someone on the other side waiting to swindle you of your money.
There are many crypto projects and companies employing the marketing stunt to grow their user base and increase the usage of their product.
Airdrops aren’t a bankable way to make money, but there’s a slight probability that they can make you a lot of money.
It isn’t the only way to make money from a promising coin; you can join an initial coin offering (ICO) if you have some cash to spare.
Be careful, lookout for signs of foul play, avoid deals that seem too good to be true, and HODL (hold on for dear life).
We are all going to make it!