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Airdrop In Cryptocurrency: What You Need To Know

By May 16, 20244 minute read

Airdrops and free crypto go simultaneously for crypto users. Whenever a new crypto project is launched, the team uses one of the most popular promotional strategies: airdrops in crypto.

Nowadays, the airdrop is used frequently in crypto exchanges. In addition to the standard trading strategy of investing one’s finances, airdrops, which include giving out free coins or tokens to users of public crypto wallets to advertise a new digital currency, can yield enormous profits. Blockchain-based companies leverage this use of crypto wallets as a marketing strategy to encourage users to use their platform.

A more extensive promotional campaign that includes elements like social media promotion, blog postings, and multiple levels of crypto holder participation is usually what airdrops are a part of. In this article, let’s dive deeper into crypto airdrop meaning and other important information you need.

Related Read: The Guide to Taxation of Crypto Airdrops, Mining, and Staking Income: Everything You Need to Know

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What is a Crypto Airdrop?

A crypto airdrop is a way to obtain free coins from a crypto project. These coins can be obtained in several ways. Free coins are frequently connected with an airdrop; however, this is not always the case. You are required to put in the necessary time and effort, or you may risk having to pay transaction costs. However, you can also take part in an airdrop for almost nothing!

To be eligible for the free gift, a recipient might need to have a minimum number of cryptos in their wallet. Alternatively, they might be required to do a specific activity, such as publishing a blog post, interacting with a significant member of the blockchain project, or blogging about the coin on a social media platform.

You must be probably wondering: How do crypto airdrops work? In the following section, you will get the answer to your query. Read further!

How Does Crypto Airdrop Work?

Typically, airdrops are sent out on the Ethereum and Binance Smart Chains. They require users to promote the organization or have a certain amount of crypto in their wallets.

The users’ availability of the projects’ tokens that are being marketed may not be guaranteed even if they follow all the requirements. Frequently, the project restricts access to members who joined it before a specific date. Like any marketing strategy, crypto airdrops have their pros and cons.

Let’s quickly have a look at them.

Pros and Cons of Crypto Airdrop

Pros

  • An excellent strategy for building “buzz” about the new coin venture.
  • People absolutely like receiving free money.
  • It has the ability to draw in an extensive user base.
  • Costs for marketing will be very minimum.
  • Others will be informed quickly about the new coin project.
  • Announcements of airdrops spread like wildfire.

Cons

  • Investors may sell the token immediately after the release, causing its value to decline.
  • The impact will be minor if fewer tokens are issued.
  • The value of a coin might be diluted by issuing many tokens.
  • It is necessary to perform KYC and AML checks, which can be a laborious process.

Various types of airdrops serve individual purposes and have unique characteristics. Let’s look at the types of airdrops.

Different Types of Airdrops

  • Standard Airdrop

This is the primary type of airdrop where participants express their desire to acquire the tokens. This might be done via the project’s website or Twitter account. The majority of these airdrops need users to submit their wallet addresses.

Due to the minimum criteria, these airdrops are the most popular among users. This is because they are basically free crypto tokens. However, a constrained number of tokens are made accessible in this manner due to their popularity. You might need to enter a lucky draw and be chosen to get these tokens.

  • Bounty Airdrop

This method, in contrast to standard airdrops, requires the user to carry out some activities. However, the activities are typically not too challenging and just call for participation in the project’s community. You may have to subscribe to the project’s updates, follow them on social media, or actively participate in their forums.

As you contribute to your privacy and time, the tokens aren’t as free as those from standard airdrops. You are, nevertheless, still qualified to earn the tokens you desire.

  • Holder Airdrop

This kind of airdrop depends on you already owning another crypto token. It might be done occasionally because keeping another token in your wallet shows you are a frequent crypto user. However, this is most frequently carried out when a crypto venture issues a new coin and wishes to thank its loyal followers who already possess previous project tokens.

How or where you can find the best Crypto airdrops is a question that must be ringing in your mind. But worry not; we are here to help you out.

How Can You Find New and Best Crypto Airdrops?

Everyone is still looking for fresh crypto airdrops. A few websites, such as Aidrop.io and CoinMarketCap, enable you to create airdrop alerts and evaluate or advertise forthcoming airdrops.

However, the best method to keep an eye out for airdrops is to search for them yourself. Examining protocols that have not yet released tokens and haven’t knocked out a free airdrop is the simplest way to determine which protocol is most likely to do so.

Beware; some airdrops are con games that you should stay away from. Before getting enthusiastic over a new crypto airdrop, always DYOR.

Bottom line

Companies and initiatives can use crypto airdrops to promote their token or coin. Giving it away to tens of thousands of various wallets is another strategy to improve the security’s liquidity. Even though airdrops are valuable and can be viewed as free money, there are still substantial risks if users are not informed of possible crypto airdrop frauds. Before jumping into getting free crypto airdrops, always DYOR!

Frequently Asked Questions

Is Cryptocurrency Banned In India?

No, cryptocurrency is not banned in India. India has seen its ups and downs in the crypto sector concerning its legal status. The Reserve Bank of India (RBI) issued a circular in April 2018 advising all organizations under its jurisdiction not to trade in virtual currencies or provide services to assist anyone in dealing with or settling them. A government committee proposed outlawing all private cryptocurrencies in mid-2019, with up to ten years in prison and severe penalties for anyone dealing in digital currency. The Supreme Court overruled the RBI's circular in March 2020, allowing banks to undertake cryptocurrency transactions from dealers and exchanges.

How Many Cryptocurrencies Are There?

There are over 5000 other digital currencies available on the internet in addition to Bitcoins. The only problem is that they haven't gotten the users' attention. Besides Bitcoins, a few other digital currencies have gained popularity among users. It's been more than ten years since Bitcoins were first released, and now they've achieved new heights thanks to their phenomenal success.

How Safe Are Cryptocurrencies?

Cryptocurrencies can be safe, but your crypto wallets can be hacked if proper security steps are not performed.There are also dangers and uncertainties associated with investments, and we cannot declare any virtual currency investment risk-free. Buying and selling cryptocurrencies does not have to be dangerous if the trader is well-versed in the market and treats his coins with care.

What Is Cryptocurrency?

A cryptocurrency is a digital currency secured by encryption, due to which chances of activities such as counterfeiting and double-spending taking place get close to impossible. Cryptocurrencies get created on blockchain technology ( a distributed ledger enforced by a distributed network of computers). Cryptocurrencies are unique in that they do not get issued by any central authority. The term "cryptocurrency" comes from the encryption techniques used to keep digital currencies and the network safe.

Which Cryptocurrency Is Best To Invest In 2021?

Many altcoins are flourishing to invest in. Some cryptocurrencies with great potential are Ether, Ripple, Tron, and more. Investors are trying to diversify their portfolios and are flocking to the leading cryptocurrencies. Many growing businesses are already accepting cryptocurrency as acceptable payment methods.

Who Invented Cryptocurrency?

Satoshi Nakamoto invented cryptocurrencies and the technology that makes them function in 2009. The presumed pseudonymous individual or persons who invented Bitcoin used this identity. In addition, Nakamoto created the first blockchain database. Even though many people have claimed to be Satoshi Nakamoto, the person's identity remains unknown.

Can I Invest In Cryptocurrency?

Yes, with exchanges like WazirX, you may invest in cryptocurrency in India. To begin, go to the WazirX website and register. After that, you will receive a verification email. The link received by verification mail will only be available for a few seconds, so make sure you click it as quickly as possible. This will successfully verify your email address. The following step is to set up security, so choose the best solution for you. After you've set up the security, you'll be given the option of continuing with or without completing the KYC process.

What Is The Meaning Of Crypto?

A cryptocurrency is a digital currency that is secured by the process of cryptography, making counterfeiting and double-spending almost impossible to happen. Blockchain technology is used to produce cryptocurrencies ( a distributed ledger enforced by a distributed network of computers). Cryptocurrencies are distinct in that a centralized authority does not issue them.

Is Bitcoin And Cryptocurrency The Same Thing?

Bitcoin is a cryptocurrency that was designed to facilitate cross-border transactions, eliminate government control over transactions, and streamline the entire process without third-party intermediaries. The absence of intermediaries has resulted in a significant reduction in transaction costs. Satoshi Nakamoto, the creator of Bitcoin, created the first cryptocurrency in 2008. It began as open-source software for money transfers. Since then, plenty of cryptocurrencies have emerged, with some focusing on specific fields.

How Cryptocurrency Works?

Cryptocurrencies use cryptography technology to keep transactions and their units (tokens) secure. Cryptocurrency works via a technology called the blockchain. A blockchain is a decentralized technology that handles and records transactions across numerous computers. The security of this technology is part of its value.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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