So, you’ve heard of your friends talking about some huge cryptocurrency airdrop soon, and something about free money? That sounds too good right? Well, kinda, but not really.
Before we begin, we have to disclaimer that this isn’t financial advice.
What is an Airdrop?
According to Investopedia, an airdrop, in the cryptocurrency business, is a marketing stunt that involves sending coins or tokens to wallet addresses in order to promote awareness of a new virtual currency. Other reasons for airdropping highlighted by Masterthecrypto include an alignment of interests, a sign of appreciation, alternative obtaining mechanisms, and fair token distribution. In other words, cryptocurrencies can be airdropped to raise awareness, bypass legal restrictions, or just genuinely out of gratitude.
Over 80% of airdrops occur on the Ethereum network, which isn’t all that surprising considering how many ICOs also occur on that network. Most of the time, those airdrops occur as a marketing strategy to garner attention and hence gain investors towards their new tokens.
Types of Airdrops
Airdrops generally come in three categories that can be further split: Bounty Airdrop, Holder Airdrop, and Hard Forked Airdrops.
A bounty airdrop is by far the most common type of airdrop nowadays. Bounty airdrops involve some kind of action on your part to participate, such as by joining a Telegram group, following accounts on Instagram, Twitter, Facebook and other social media platforms, or retweet, like or repost some post on social media platforms. Bounty airdrops are usually employed in a mass marketing strategy to explosively increase awareness of a certain coin or token.
A holder airdrop is what it sounds like: a certain number of holders get to receive the airdropped coin or token. A holder airdrop usually occurs more than once, and is used to incentivise current holders to keep holding the token, and potential investors to buy in and hold the token.
A hard forked airdrop occurs when a blockchain is split. A hard fork refers to when a certain blockchain permanently splits, either due to dissatisfaction with the functionality of the current blockchain, or to radically change a blockchain’s protocol. When a hard fork occurs, members may be airdropped the new coin directly into their wallets. One of the most notable hard fork occurred when Bitcoin split into Bitcoin(BTC) and Bitcoin Cash(BCH)
Dangers of Airdropping
At this point you may realise that you’re not paying a cent, so it can’t be dangerous right? Well, not really. One very overlooked danger of airdropping is disclosing your personal data. Some bounty airdrops may come in the form of “go to this website, fill out this personal particulars form and good luck!”. However, you’re disclosing potentially sensitive information to people that you don’t know, such as your address, date of birth, or identification numbers. Another common danger of airdropping is actually a hidden airdrop scam. What we mean by that is that the “developer” may ask for an amount of money in return for more tokens than that money is worth. Do you see where we’re going with this? Yeah, they’ll just grab the money, say thank you very much, and you’ll never hear from them again.
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