What is a Crypto AirDrop?
Airdrops are another part of crypto investing that I find fascinating. Basically, when a company does an ICO, the participation becomes increasingly competitive. The company controls the dispersement of the tokens, so they can decide who they sell to on a priority basis (institutional investors who buy a lot at a discount, individuals who pass the KYC), or those they want to reward for being active members of their communities who miss out on the ICO for any particular reason.
How Crypto Airdrops Work:
- If the new coin is a fork of an existing coin – such as Bitcoin Cash, Bitcoin Gold or Zclassic, if you have that coin you will get a pre-determined amount of the new coin being generated. For coins like Bitcoin Cash this is in effect similar to an ICO, because every coin entering into the market started at approximately $200. The BitCoin Cash team retains coins, part of which they will use as operating capital for the company, other to compensate or provide equity to employees.
- If it is a token based on an existing platform – like Ethereum, if a company wants to airdrop tokens, it does a scan of the Ethereum blockchain and makes a list of everyone that currently owns Ethereum at a moment in time and they want to participate in the airdrop (follows their telegram, has given their details on the website, whatever). The company can then send airdropped coins to that Ethereum address. Your public ethereum address is public (duh!) on the blockchain so anyone can see it and send you ethereum or ERC-20 tokens. If anyone asks you for your private key to send you airdrop tokens, they are trying to steal your money – you do not need a private key to airdrop tokens. The amount and number of coins is typically small and a token gesture for being a member of the community – either following their Telegram or Reddit, or sharing the marketing message on social message.
What You Get From An Airdrop:
The net result is cool, you get free coins (albeit usually small numbers) that could in theory have future value. I recently got Airdropped some coins from Shipchain, an ICO I wanted to participate in but couldn’t get into. No idea if Shipchain will ever be worth anything but its a nice gesture.
Check out AirDropAlert, a website dedicated to tracking open AirDrops.