Airdrop (or crypto airdrop) is when a blockchain project distributes free tokens or coins to the crypto community. To be a recipient of an crypto airdrop often the only requirement is that you have coins from the relevant blockchain stored in your wallet.
Examples of this format of airdrops are Byteball, Stellar lumens and OmiseGo. These airdrops required you to proof you were the owner of Bitcoins or Ethereums at a certain time ( snapshot) of the blockchain.
What is crypto currency Airdrop?
In cryptocurrency, the term “airdrop” is used to describe a type of distribution event for a cryptocurrency where tokens are distributed to existing wallets. Or more simply, an event where “free coins” or coins purchased during a pre-sale are “dropped” in existing wallets. In other words, the term “airdrop” describes a distribution event that occurs when a cryptocurrency decides to distribute tokens to users for any reason. For example:
A distribution event that occurs after an ICO goes live and the smart contract for the ICO sends new tokens to the existing addresses of users who participated in the pre-sale. For example, one buys into an ethereum-based ICO, then on the airdrop date the token is sent to user’s wallets and they can then “add the token” to their Ethereum wallets.
A distribution event after a hard fork or the creation of a new token which results in existing coin holders getting “free coins,” but where the platform being used requires the distribution of tokens. For example, a fork on the Ethereum network that creates a new token on the Ethereum network or another coin’s network (see fork-airdrop hybrids like the Ethereum Classic Callisto Airdrop and the Loopring Airdrop for example).
A distribution event where tokens are given to existing holders as a reward for sticking with the cryptocurrency or as an incentive to get people to hold the cryptocurrency or a related token.
How to participate in crypto airdrop?
The format of these crypto giveaways is usually like this: At a pre-announced time the project behind the event will take a ”snapshot” of the blockchain, anyone holding Ethereum or Bitcoin at that point will receive a certain number of free e-tokens. This can also be done on other blockchains, but Ethereum and Bitcoin are the most used for this airdrop format.
Other (often smaller) airdrops require social media posts or you need to contact a member of the team on the Bitcointalk forum. This form is gaining more popularity since September 2017.
- An Ethereum Wallet: not one that is on an exchange. It has to be a personal address that is ERC20 compatible because most of the tokens that are airdropped are ERC20 tokens, which are or were originally Ethereum-based ICOs.
- The Ethereum Wallet Must be ACTIVE. By active, we mean that you have to show at least some human use of it. Lots of airdrops have checks in place to make sure that you aren’t just randomly generating a bunch of addresses and signing them all up to unfairly obtain more coins. This means that if your wallet doesn’t show activity, it might not receive the airdrop. Sometimes, coins will be explicit in what they look for, including some type of balance in the account.
- Telegram Account: I’m sure there are amazing reasons why Telegram is the chatting tool of choice for many of these ICOs. The coins want to boost the audience count. Usually, these airdrop coins will also require you to sign up for their Telegram accounts. Until you receive the coin in your Ethereum wallet, do not leave the Telegram accounts or you risk disqualification for the airdrop.
- Twitter Account: Similar to the reasons behind the Telegram account, many of the airdrop coins will also require you to follow them on Twitter. Some of them will even ask you to retweet some tweet.
- Email address. sometimes airdrops will ask for your email, too. If you don’t feel comfortable with giving them your real email, just create a spam one. Remember the password, though; some of them actually ask you to confirm your email.
Another possible way to get free e-coins is a faucet. This means you get a small amount of free crypto for a longer period of time. Some wallets, crypto casino's or crypto promotion sites run this type of airdrop.
Why would anybody give away free cryptocurrency?
To offer coins for free the people are the product. With doing an airdrop the project creates awareness about their ICO or token. It brings people to the project that otherwise would not have owned or heard about it. It could lead to token price appreciation, since people value a token they own higher then a token they don't own. This is called the endowment effect: "In psychology and behavioral economics, the endowment effect (also known as divestiture aversion and related to the mere ownership effect in social psychology) is the hypothesis that people ascribe more value to things merely because they own them." In addition to that I think people are more likely to buy a token that they previously owned or still own, since they are already familiar with it.
A crypto airdrop would create a community/network of people who own the tokens. If you would list the token distribution after an ICO in a pie graph, a large part of the pie is still owned by the Dev's or project. Another large part is owned by people who joined a pre-sale. And a reasonable part is owned by people who invested in the ICO. An airdrop adds a extra slice to the pie and that slice will have the most people in it. Decred still shows a pie-graph like this example on their homepage.
An crypto airdrop also plants a seed. When you look at Coinmarketcap you will see a list of thousand coins. Just on page one you can see 100 coins listed. However if you have or had a coin that name is still in your brain. The seed is planted and whenever you check coinmarketcap and scroll down, the name of the free e-Coin will jump out and people will check how it is doing. If they see an article that the free e-Token is doing well or bad, they are more likely to click it if they own it or previously have owned it. It's just like advertising.