What is a crypto airdrop? Why investors ought to be wary of these lucrative giveaways


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Key Highlights

An airdrop involves giving out free coins or tokens issued by a crypto company or platform to established crypto holders, usually in exchange for marketing-related tasks such as blog posts, or promotional content on social media.

Airdrops are, in a sense, not unlike a traditional company offering free samples to potential customers. However, in the crypto space, they can take various forms

As with anything free, it is always prudent to approach an airdrop critically since the tactic has been previously used by malicious actors to dupe crypto users out of their coins or tokens

The ballooning world of cryptocurrencies has made it increasingly difficult for crypto-based companies to distinguish themselves from the pack. And with various countries around the world growing more comfortable with digital assets, it appears that this is only going to get harder in the years ahead. Given the rising competition in the crypto space, several outfits are now turning to a marketing tactic known as a crypto airdrop to gain traction. 

Essentially, an airdrop involves giving out free coins or tokens issued by a crypto company or platform to established crypto holders, usually in exchange for marketing-related tasks such as blog posts, or promotional content on social media. Those who are already firmly entrenched in the crypto space would have already likely encountered a crypto airdrop given their increasing frequency and popularity as a vehicle to boost awareness and popularity of a crypto platform. 

Airdrops are, in a sense, not unlike a traditional company offering free samples to potential customers. However, in the crypto space, they can take various forms. For instance, in a standard airdrop, small amounts of cryptocurrencies are sent for free to the crypto wallets of certain users, in exchange for these users providing their wallet addresses and signing up to the platform. 

With bounty airdrops, some kind of promotional activity is requested from a crypto user in exchange for coins or tokens. Exclusive airdrops are those where free coins or tokens are sent to the crypto wallets of loyal users while in holder airdrops, coins and tokens are sent to users provided they hold them in their crypto wallets. 

Given the lucrative opportunities that crypto airdrops may offer, it isn’t a given that all participants in a scheme will receive an airdrop of tokens or coins. Different platforms have varying requirements and, in many cases, the number of people participating in the programme grows too large for everyone to receive an airdrop of tokens. 

However, in order to receive these coins or tokens, users are required to have wallets based on the same blockchain as that being used by the platform. For instance, MyEtherWallet is used for coins or tokens built on the Ethereum blockchain. The large majority of crypto platforms are built on the Ethereum blockchain. 

Why should you be careful about airdrops? 

As with anything free, it is always prudent to approach an airdrop critically since the tactic has been previously used by malicious actors to dupe crypto users out of their coins or tokens. For instance, a scam artist may send malicious tokens to a particular set of users to spur their curiosity. When these users seek out what these tokens are on the internet, they will, inevitably, be directed to the scammer’s website and could fall prey to phishing schemes. 

In other cases, scammers may request users to transfer some of their own cryptocurrencies to a wallet, promising a transfer of new tokens. Another red flag to look out for is if the airdrop amount is extremely high. 

As such, users are advised to conduct their own background research around specific crypto platforms before engaging in an airdrop. The lure of free tokens or coins from a platform that could explode in value can be difficult to quell but staying vigilant will ensure that your cryptocurrency holdings are not compromised. 



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