In the world of crypto, you might hear some words that might sound absolutely Hebrew to you and you might not have any idea of what that means. While Airdrop in cryptocurrencies does sound like a believable word, many of you might still not know what it really means. Here, we discuss everything you could possibly want to know about this crypto jargon, and break down all the reasons Airdrops are meant for.
What is Airdrops in Cryptocurrencies?
An Airdrop in the world of crypto refers to the way of distributing fresh coins or tokens by giving them as rewards to people who already hold a particular blockchain’s native currency, like the Bitcoin or the Ethereum blockchain.
Basically, if one is already a loyal holder of one particular crypto coin, this automatically makes him or her eligible to get access to other tokens/coins on the same platform just by virtue of holding the parent coin. Airdrop is also commonly referred to as ‘free droppings’ since they are received for free by existing token holders without having to pay anything out of their own pockets. Their eligibility arises solely from their ownership of parent tokens and nothing else.
Why are Airdrops Used In Cryptocurrencies?
There are a host of various motivations behind why blockchain networks and companies give out these tokens and coins through Airdrops. Some of these reasons might be for marketing purposes,forks, decentralization and distribution and so on. Airdrops can be a particularly impressive marketing tool by rewarding long-time users of a parent token. Here’s a look at all the key reasons why Airdrops are conducted at all :
1. As A Reward To Early Bird Investors:
Often companies feel the need to show their gratitude to investors who first contributed to their ICOs during their initial token sale. Hence they give out free tokens to these early bird investors as a gesture of appreciation. This also serves a dual purpose because it makes original investors hold on to the parent tokens for a much longer time than they might usually have, in the hope of rewards in the form of Airdrops.
2. Promotional Strategy For New Tokens:
Just like real-life asset companies or FMCG companies send out PR packages consisting of samples to spread awareness about the new product they’re offering, new crypto offerings also want to spread is awareness about their token in the same manner. Giving out free tokens to few users who are known to be loyal token holders is a great way to go about it.
Sometimes when existing cryptocurrencies undergo a change, or is forked, in order to form a new coin, many old holders of the original token may be given free versions of the newly formed token. This was done in the cases of Bitcoin Cash, Bitcoin Diamond, Bitcoin Gold and Litecoin Cash, among others.
How Do You Get To Know About Airdrops?
Routinely checking Reddit threads on crypto or websites such as www.airdropalert.com can inform a token holder of Airdrops taking place around the crypto world. Getting an Airdrop often requires one to complete tasks on social media sites such as Twitter or Telegram. The token holders should take requisite steps to safeguard the tokens they received for free by investing in a secure wallet and answering the question as to whether they should choose online or offline storage options.