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Airdrops

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Written by   19
1 year ago
Topics: Cryptocurrency

An airdrop is a marketing stunt in the crypto world in which tokens or coins are sent to blockchain wallets. It's usually done to support a new cryptocurrency or token.

This is generally achieved at no cost to the receiver. This is often done at random, or after an initial promotion of the upcoming airdrop, recipients are explicitly chosen.

Recipients may be asked to do something, such as retweet, to promote the digital asset. During the 2017 crypto coin boom, airdropping became increasingly common.

However, there is a crucial distinction to be made between an airdrop and an ICO (ICO). When an individual contributes money to the project's promotion, it becomes an ICO rather than an airdrop.

They've proved to be an incredibly successful way of supporting digital properties, and they still are. As a result of airdrops, participants are often encouraged to collect more coins or tokens.

This has frequently been shown to have an amplifying effect, with the buzz surrounding a coin or token aiding in the inflating of its value. Airdrops are often used to engender loyalty among participants, with subsequent airdrops distributing more of the asset to those who carry the most.

They also, however, triggered a schism in the crypto group. Since some people now equate airdrops with spam, some social media networks have banned ads advertising them.

Scammers have often taken advantage of their success to set up phoney airdrops in order to rob funds from unwitting participants. To combat this threat, websites like airdrop warning were created, which only lists legitimate coin and token airdrops.

There are three types of airdrops

  • The most popular form of airdrop is a bounty airdrop, which is used to promote and raise interest in a new token or coin.

  • Holder airdrop: This is a way of thanking token or coin holders for their loyalty. As a result, a receiver's obligation is to have the token or coin in question at the time of the airdrop.

  • When a blockchain forks, such as when Bitcoin Cash split from the Bitcoin blockchain in 2017, this is done as a fork airdrop. Participants in a fork airdrop would be needed to carry the coin of the pre-split cryptocurrency before obtaining coins of the new forked cryptocurrency.

The first airdrop, in some shape, was in 2010, along with the first Bitcoin faucet. Participants who completed those tasks earned 5 BTC as a reward at the time.

Although this may seem remarkable given how much a Bitcoin is worth today, it was only worth a fraction of that value at the time. Bitcoin Faucets still exist, but the incentives are far less than 5 BTC.

In 2017, Stellar Lumens (XLM) conducted an airdrop with the only stipulation that participants hold Bitcoin. About 19% of the total token supply was distributed. In 2018, another $125 million in XLM was allocated.

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Written by   19
1 year ago
Topics: Cryptocurrency
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