If you’ve been paying attention to the crypto space at all, you’ve probably noticed that airdrops generate quite a lot of hype, and for good reason: they’re the closest thing to receiving free money, even if it’s the digital kind. This explains why so many people track crypto news today so closely, and airdrop news in particular. It seems like one of the easiest ways to spot and jump on board promising crypto projects early, before everyone else catches on, and hopefully earn significant gains when these projects take off.
Besides, who would pass on the opportunity to get their hands on some shiny new coins without spending a dime? Except that we all know there’s no such thing as a free lunch. When something seems too good to be true, one can’t help but wonder what’s the catch. Crypto airdrops are no different. They sound great in theory, but are they all that great in practice? Stick around if you want to find out.
Crypto airdrops at a glance
Airdrops are marketing strategies that imply crypto projects sending free coins or tokens to all wallets that meet certain criteria. The purpose is to help the projects in question gain traction and visibility, and encourage adoption, which is a must in an industry that has become incredibly crowded, making it increasingly difficult for new entrants or smaller platforms to stand out and gain the attention and support they so desperately need.
That’s also why almost all airdrops are initiated by blockchain startups looking to boost awareness and grow their user base. The likes of Bitcoin and Ethereum don’t need to use this technique, since they are already extremely popular among traders and investors. However, sometimes, established projects also conduct airdrops to reward active users for their support or increase liquidity. Therefore, airdrops are largely regarded as a win-win: users acquire digital currencies without having to buy them, and crypto companies get to promote their brand and attract new users.
But the coins don’t just randomly fall from the sky straight into people’s wallets. The distribution of coins follows specific rules. While there are certain airdrops that automatically distribute tokens with no strings attached, in most cases, you’ll have to perform certain actions if you want to qualify for an airdrop. Based on their specific requirements, airdrops can be divided into five main categories:
- standard airdrops – they send coins/tokens to community members simply because they’ve registered on the platform and provided a valid wallet address.
- holder airdrops – holders of certain coins become automatically eligible for receiving the airdrop.
- bounty airdrops – only distribute rewards to users who conduct tasks such as signing up for newsletters, posting about the assets on social media, trading them, or recruiting other users.
- exclusive airdrops – these are more targeted airdrops, reserved for select individuals, who are usually chosen because of their involvement with the project.
- raffle airdrops – people enter a raffle or lottery to qualify for the airdrop, which can take any of the forms mentioned above.
That pretty much covers the basics, but doesn’t really answer the question of whether crypto airdrops are truly worth the hype and attention. Well, judging by what we’ve seen so far, there are several pros and cons to consider.
The advantages that lure people in
The most obvious benefit that airdrops provide is the ability to gain exposure to cryptocurrencies that might pick up pace if the stars align. If you’re not willing to invest in a crypto project and put your money on the line, but still want to become a holder, airdrops are the next best option. Compared to trading and investing, or other methods of acquiring digital currencies, airdrops seem like a convenient and low-risk solution for getting into crypto.
Since most airdrops don’t require any financial investment, they are accessible to everyone, which lowers barriers to entry and allows even those with limited budgets to become active participants in the crypto space.
Furthermore, airdrops encourage exploration of the crypto space, beyond established coins. Thanks to these marketing stunts, you may come to learn about promising blockchain projects that you would have otherwise disregarded.
The early bird gets the worm adage might also apply to airdrops. Under the right circumstances, small-scale cryptos can turn into highly valuable assets, so if you’re an early adopter, you might reap impressive profits.
The cons that make some back down
Airdrops are typically discussed in a positive way, but that doesn’t mean they’re flawless. The risk of scams is something you should take into account because not all airdrops are what they seem to be. Sometimes, what looks like a legitimate project turns out to be just a cover for a scam. Bad actors take advantage of the large number of airdrops available at the moment to draw in unsuspecting users into their traps and steal their personal data or private keys.
Security concerns are also something to be aware of, as certain airdrops ask for extensive personal details. If the project doesn’t have strong security measures in place, there is a high risk that the sensitive data it holds might fall into the wrong hands.
Some argue that with all the buzz they create, airdrops amplify the fear of missing out (FOMO), which, as we all know, can cause people to act irrationally and make hasty decisions that they might come to regret.
There is no guarantee that the coins or tokens you receive via an airdrop will ever amount to anything. So, after dedicating time and effort to becoming eligible for the airdrop, you might end up with a bunch of worthless assets.
Airdrops are a double-edged sword. While they may open the door to new market opportunities, they also present risks that you would do well not to ignore. This stresses the need to research each project before sharing your personal details. Choose your airdrops carefully and only engage with platforms that seem to have potential and could provide value to you.
