Crypto airdrop is often referred to as a great marketing technique that is beneficial for both the companies and the coin holders. Is it true?

Crypto Airdrops

The word "airdrop" probably doesn't sound so strange for many people, especially Apple users. Airdrop from Apple refers to a smart feature that can wirelessly send documents, photos, videos, websites, and map locations to and from an iPhone or Mac.

But what about airdrop in the crypto world? Is it the same or something completely different? This article will explain what a crypto airdrop is and how it works.

 

Defining Crypto Airdrops

A crypto airdrop is basically a marketing tactic that involves the free distribution of crypto coins or tokens in a certain ratio to a specific group of people. The aim is to generate publicity and gain an audience quickly, as well as to put an early value to a token as recipients may begin to trade their airdropped tokens.

Airdrops are therefore commonly used to boost a crypto project and make it the talk of the day. News about new airdrops is usually posted on a crypto project's website, Medium page, or third-party airdrop tracker. You can also find information about new crypto airdrops across various social media.

Crypto airdrops usually have a specific target of recipients, depending on what the project needs. Some airdrops may send crypto tokens or coins to members of a particular blockchain platform.

For example, some startups may airdrop coins to wallet holders of the NEO, Ethereum, or the Bitcoin network. Some others may require the recipients to hold certain tokens or hold a specific balance in order to be eligible for an airdrop.

Take TRX holders that will continue to receive BTT airdrops consistently until February 2025.

In some other cases, the recipients may be required to perform simple tasks such as posting about the project on social media.

That being said, if you wish to join a certain crypto airdrop project, make sure to read the information on the official page to see if you're eligible to receive the tokens or coins.

It is worth mentioning that crypto airdrops are not the same as Initial Coin Offerings (ICO). ICO is intended to seek investments from individuals, whereas airdrops are mainly used only to raise awareness.

However, some airdrops may be followed by an ICO or other token fundraising programs.

 

The Benefits of Crypto Airdrops

For crypto enthusiasts, the appeal is simple: crypto airdrops allow people to receive tokens without having to buy the asset.

Consider it as free money. In some cases, these airdropped tokens may gain value over time, giving the holders a considerable amount of profits without having to spend a single dime.

On the other hand, companies are also thriving because airdrops can increase awareness about their projects. People who probably would have never known about the project might even end up becoming investors.

The referral bonuses may also encourage people to spread the word, which contributes to the company's low advertising. It can potentially build a community around the project as well, making it more recognized and supported.

So fairly speaking, it's actually a win-win situation for both parties.

 

5 Objectives of Crypto Airdrops

In general, there are 5 main purposes of crypto airdrops. They are:

 

1. Spreading awareness

Spreading awareness is perhaps the main reason why blockchain startups create airdrops. Initially, ICO dominates the industry in terms of crowdfunding, but soon people discovered that it has issues.

For instance, there was a sudden emergence of various startups with little to no preparation and plagiarized white papers in hand, which only brings chaos to the industry.

Apart from that, the fact that some countries like China have banned ICOs and regulators like the SEC to target ICOs that deal with domestic US investors trigger a bigger urgency for a new way of legal marketing.

As a result, crypto airdrops became an excellent solution to spread awareness of the project. The company only needs to distribute a small portion of their coins, and in return, they will get recognition and perhaps support from many people.

Active social media users probably are the best airdrop targets because they can easily promote the project on their accounts, creating publicity and hype on the internet.

 

2. Attracting Investments

Besides creating public awareness, airdrops can also attract investors and motivate them to support the project. There's a great chance that the recipients would gladly invest in projects that give them free money.

Especially, in today's economy where interaction metrics and engagement numbers can be measured through many ways such as social media brand mentions, the number of followers on social media, or trending Google search terms.

The higher those analytics are, the bigger chance they've got to boost the company's overall capital.

In most cases, airdrops are followed by token offerings, whether in the form of ICOs, CEOs, IDOs, etc. This is actually a clever way to promote the project on a low marketing budget.

Instead of paying for Google ads and such, crypto airdrops can easily increase community engagement by just distributing a small amount of tokens.

 

3. Creating a Community

In addition to public awareness and attracting investors, airdrops can also create a community to support the project.

Also, once the community is created, companies can collect data such as email, social media accounts, and their views on crypto projects based on the form they were required to fill.

By having such information, the project's team can make targeted marketing campaigns for future events.

 

4. Rewarding Loyal Users

Participants in the crypto industry sometimes only care about the highest Return on Investment (ROI) and ignore a project's long-term sustainability.

Some developers would create a short-term buzz about a certain token so that people will be eager to buy it when it hits exchanges.

Once it does, the developers quickly dump their heavy bags and make a huge profit off the back of small-time investors. Usually, the project then becomes inactive.

Although this is not categorized as a scam per se because the token is real, such behavior can actually damage the crypto platform.

To counter this, some companies would conduct airdrops to reward loyal users who either use their platforms or continue to hold on to the token in their wallets for a certain period of time.

 

5. Balancing Token Distribution

In some cases, some giant investors would take their part and secure bargain prices during a coin's early days, allowing them to own a large amount of coins and dominate the circulating supply.

This condition may create centralization, which means that the distribution is unbalanced and may create issues. Therefore, airdrop projects can also be used to balance out a token's distribution.

 

Are Crypto Airdrops Safe?

Something to consider before entering the world of crypto airdrops is that there are scams out there. Some users have fallen victim to frauds in the past few years, especially during the ICO craze in 2017 and 2018.

With the fact that the industry is generally still loosely regulated, some savvy scammers have found a way to gain money without actually making anything.

They would promote their non-existent projects and then claim to have plans to airdrop some crypto. Sometimes they would even require small fees to be eligible for the alleged airdrop and persuade people into believing that the project will be highly successful in the future.

Although such scams might be less common today than they were three or four years ago, investors would still need to be aware of them and stay alert when it comes to crypto airdrops.

So if you're searching for any crypto airdrops on Google, make sure to be very cautious and check the legitimacy of the site or project.

Remember that fake sites can pay to advertise and make their site easily appears on the search engine and social media.

 

How to Avoid Scams

Crypto airdrops may not be free of risk, but so are other methods of promotions or campaigns. It's important to remember that not all crypto airdrops are scams.

Many airdrop projects are actually real and might give you the benefits you seek, but only if you know where to look and how to identify the fake ones.

First off, if you notice that the airdrop requires you to pay a certain amount of fee for the project, don't do it. It is almost certainly a scam.

In addition, some scams even ask for users' public addresses and their private keys. Those who don't fully understand how crypto works or how little you can trust people on the internet are most likely to fall victim to this kind of scheme.

Keep in mind that this type of project is definitely fake, so don't give out your private keys for any reason.

Secondly, some airdrops are simply used to collect your data. In this case, they usually perform "dusting" attacks, which usually involve giving a fractional amount of crypto to your wallet and thereby reveal your public address to the bad guy.

Once they have your public address, they can easily check your portfolio through blockchain explorer tools. And if you're holding a significant amount of crypto assets in that wallet, you could be theoretically targeted through phishing, SIM swap, or other hacking attempts.

To best avoid such practices, we recommend you create a new wallet specifically for airdrops. This is actually pretty simple to do.

As most airdrops happen on the Ethereum network in the form of ERC-20 tokens, you can set up a new address on the likes of MetaMask or MyEtherWallet to receive airdrops.

You can also use this method to separate the airdropped coins from those you've actually paid for.

 

Conclusion

Crypto airdrop is one fun way to earn crypto tokens or coins for free and learn about new blockchain projects. As it is mutually beneficial for both the companies and the coin holders, we might expect to see more crypto airdrops in the future.

However, while some recipients may have gotten lucky enough to receive tokens that actually have value, many others have fallen victim to empty promises of the "next big thing" in crypto.

This is why, apart from checking the airdrop's safety, you should also take a good look at the project behind an airdrop to see if it has any chance of getting big.

If the project looks unconvincing or even hopeless, you might want to reconsider or just look for another one. But if you do find a promising project, you would want to hold onto the airdrop tokens in case they become valuable in the future.