Crypto Airdrops

Hi Folks. How have you been? Compliments of the Season. Wow! it is a New Year. Last year, I started this diary on my web3 developer and learner experiences. It was mainly focused on applications of web3 which we can all agree are quite numerous and important.

The last topic I discussed was an introduction to Initial Coin Offering. In a summary, it is described as a means in the chain of a crypto project launch and is closely related to the Initial Public offer which defines the steps a corporation takes in taking a company to the stock market. You can catch up on it here.

Today as the curtain raiser of this New year, I wish to introduce the concept of Airdrops, another exciting happening in web3 today. So what is an Airdrop or better still a Crypto airdrop?

According to Investopedia, "A cryptocurrency airdrop is a marketing strategy that involves sending coins or tokens to wallet addresses...The ultimate goal of a crypto airdrop is to promote awareness and circulation of a new token or coin."

So what are the common types of airdrops available today? These include the standard airdrop, the bounty airdrop, the raffle airdrop, the exclusive airdrop and the holder airdrop. Let's look at each closely.

1. The standard airdrop - This transfers an amount of native coin or token into existing wallets as a marketing strategy. It is usually carried out to promote the brand and encourage more people to adopt the asset, often during their initial coin offering.

2. The bounty airdrop - This is also a marketing strategy, but potential recipients have to engage in some promotional activity to receive the digital asset. In exchange for performing tasks, users often receive points that correspond to how large of a bounty airdrop they receive. Users may also be required to earn a certain amount of points before they qualify for their airdrop. For example, a user may be eligible for an airdrop after earning 100 points with each item mentioned being worth 50 points.

3. The raffle airdrop - A raffle airdrop occurs when a limited number of wallets are randomly selected to receive the airdrop as a result of the situation when the available number of those interested in an airdrop exceeds the amount available for distribution.

4. The exclusive airdrop - This is a more specific type of holder airdrop where specific people are individually selected for the airdrop. They may be selected not based on the number of tokens they have but based on other elements such as time spent on a project, most money spent on the non-token activity, or the number of posts in a forum.

5. The holder airdrop - Holder airdrops are targeted at people who have some amount of another cryptocurrency in their wallets. This is made easy because since wallets and blockchain information are part of a publicly distributed ledger, all users of blockchain have full transparency into the wallets and distribution of tokens.

So first, why should you bother about airdrops? As implied in the intro, airdrops are valuable for their marketing advantage. Companies make use of it to promote their web3 crypto projects. This usually follows the ICO stage of a project launch.

For enthusiasts or investors, airdrops are always looked forward to because it is a quick way of acquiring crypto assets.

There are also pitfalls to look at when engaging in airdrops. One such is scams. This includes fake airdrops or fake key scams, where scammers try to get a hold of your money or private key under the pretense of giving you a token airdrop in return. Another form of an airdrop scam may also occur by enticing market participants to invest in a specific security in hopes of being airdropped with a different item.

So how can one protect themselves from such pitfalls? The number one rule of thumb is to research, research and research. Learning about your project of interest may seem laborious but it will save a ton of pain eventually. Other steps to take to stay clear from such scams include

1. Connect only to websites you are familiar

2. Consider creating separate wallets for airdrops. This would ensure that you don't lose your valuable assets should there be an attack.

So in rounding off, I wish to summarise what a crypto airdrop truely is. It is a means by which companies send small quantities of their crypto tokens to targeted crypto enthusiasts or investors and this can be in such forms as standard, bounty, raffle, exclusive and holder airdrops. Also mischevious parties can use airdrops to attack unsuspecting members of public via scams. It pays to know how to defend yourself from such pitfalls.

Thank you for reading my first post of the year. I hope to be back with another interesting web3 topic next week. Take care and see you then.