Airdrops can be defined as the process whereby a cryptocurrency company distributes cryptocurrency tokens to the wallets of some users free of charge. Airdrops are usually carried out by blockchain-based startups to bootstrap their cryptocurrency projects.
In other words, if you HODL one type of coin, you are automatically eligible to claim other tokens or coins just because you were holding the parent coins or tokens on which airdrop is being done. That is why this method of coin/token distribution is called airdrop or ‘free dropping’.
WHY DO CRYPTO AIRDROPS OCCUR?
There are several reasons for carrying out cryptocurrency airdrops, from creating buzz around an upcoming venture to actually distributing a supply of tokens or coins. Some other reasons for carrying out crypto airdrops include:
- Even distribution of total token supply
- Rewarding early investors who first bought project tokens
- Raising awareness for the new cryptocurrency
- Marketing and hype is the most common trend nowadays. Many projects airdrop coins/tokens for the purpose of marketing and collecting leads for further business opportunities.
Hard Forks are another reason airdrops may be used. When a fork occurs for cryptocurrencies like Bitcoin, Ethereum, Litecoin, Monero and a new coin is created, airdrops can be used to distribute the new coin to existing holders of these parent coins.
To conclude, airdrops have nothing to do with the image you probably have in your head of an airplane dropping coins from the sky. Would be nice though, eh?
Airdrops are simply free distributions of tokens to project supporters and investors. You have to remember that with the popularity of cryptocurrencies, fraud and scammers can try to take advantage. Always confirm the authenticity of a cryptocurrency airdrop campaign before participating in it.