Cryptocurrency airdrop is a marketing strategy that is used mostly by new companies in crypto business. It involves sending coins or tokens to wallets to promote new virtual currency. Usually they are sent for free, or in exchange for small service such as sharing them on social media.
The fundamental goal of a crypto airdrop is to raise awareness of a blockchain start-up, initiative, or service. The team may bootstrap its project and ensure a fair distribution of tokens among its community from the start by issuing tokens to users. Furthermore, once the token begins trading on an exchange, recipients of these tokens are incentivized to raise awareness and help the project reach a larger audience. The greater the interest in the token, the more likely it will appreciate in value.
Users who interact with new and existing platforms on a regular basis are likely to receive an airdrop at some point. As part of a larger marketing campaign, blockchain-based organizations and developers distribute free tokens to members of their communities. The fundamental concept is to deliver newly created tokens to hundreds or thousands of different wallet addresses in the hopes that receivers will become more interested in the corresponding project - even if it's just to learn how to cash out the free tokens into anything else.
This idea is comparable to receiving a free discount card in the mail to entice you to visit a new store in your neighbourhood. In most cases, users receive a crypto airdrop in exchange for completing a certain assignment:
- Following a social media account is a common example of one of these duties.
- Including hashtags in a share or retweet of one of their posts.
- A transaction can be sent or received (using a particular crypto platform or wallet).
- Signing up for updates and creating an account.
Promoting the launch on a project's website, cryptocurrency forums, and social media is a common way for airdrops to gain popularity. This is like receiving a coupon in your inbox with a discount code, as both campaigns are aimed to entice more people to use the platform by offering a monetary incentive.
Users will never be asked to invest in a legitimate crypto airdrop. Instead, it's a method to distinguish yourself from competitors who have sought outside investment before releasing their coins. And regardless their popularity, they are not as safe as they seem. There will be airdrops that are nothing more than pump-and-dump operations because users receive "free money" in their wallets. More specifically, the developer creates a token in the hopes of generating enough interest for it to be listed on an exchange. When tokens begin to trade, the inventor sells a large chunk of their holdings, causing the price to plummet.
Crypto assets as unregulated, decentralised and highly volatile assets entail substantial risks and you may lose all invested capital.
Check Risk Disclosure for detail risk information.