Airdrop is a new marketing technique used by blockchain-based start-ups to incentivise the use of their platforms.
Airdrop is being vividly used these days in crypto trading. Apart from the general trading method by investing own money, one can earn huge profit through Airdrops — by providing free coins or tokens to users with public crypto wallets to promote a new virtual currency. This usage of crypto wallets is a marketing tactic employed by blockchain-based firms to incentivize the use of their platform.
Airdrops are typically part of a larger marketing campaign that includes things like social media promotion, blog postings, and various levels of crypto holder participation.
Types Of Airdrops
Small amounts of cryptocurrencies are transferred for free to wallet users, provided your wallet address or signing up with the new crypto platform would be sufficient for standard airdrops.
This works like a barter system. The wallet user has to engage in some sort of promotional activity in exchange for the airdrops.
Exclusive airdrops are given to loyal users of a crypto platform. These airdrops are more like rewards.
As the name suggests, holder airdrops are provided to wallet users for holding particular cryptocurrencies. They are usually popular ones like Bitcoin or Ether.
How Do Airdrops Work?
New blockchain-based businesses promote airdrops by offering free coins for their virtual currency on their website. The corporation then transfers the coin or tokens to established cryptocurrency wallet holders after raising awareness.
"Crypto Airdrops can sometimes be used as a ruse for illegal activity. As a result, users must exercise caution. Because they're designed to be promotional tools, you'll want to be on the lookout if a project is looking for funding, " says Manish Kumar, co-founder of two blockchain-based financial markets platforms GREX and RealX.
To stand out in the crowded crypto market, Airdrops assist crypto start-ups. The life cycle of a virtual coin depends on how many people are trading and holding it. So, Airdrops assist get things started by distributing currencies or tokens to a small number of people in order to build an initial user base without forcing them to spend money on something they may not be aware of.
To avoid such scams; crypto experts have advised doing research and due diligence on the company that is having an airdrop. "Before participating in an airdrop, you should verify forums and official websites to ensure that it is legitimate," said Kumar.