Steemit Crypto Academy Contest / S12W01 - Understanding Cryptocurrency Airdrops

Greeting Steemit friend
Airdrop is a term used in the fintech sector and used to raise awareness of newly launched cryptocurrency or crypto projects.

What is a crypto airdrop?

So in a simple understanding, Crypto Airdrop is a direct deposit of free tokens into a user's wallet to build interest in a project. It is a strategy in marketing, called guerrilla marketing as it can lead to the fast adoption rate of the native coin.

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Types of crypto airdrops

There are different types of airdrops, and most of the time it depends on the objective of the owners. As I mentioned above, it is a market strategy that some will use as a tool to make users smile, and sometimes to be used to build a community after a hard fork. Let me mention a few below:

• Standard Airdrop

It is the most common type used in the fintech sector. Here users are asked to create an account and get a certain amount of tokens. It is always a kind of first-come-first-serve, and a delay can lead to having nothing or a reduced amount. Example https://airdrops.io/rabbitx/

• Bounty Airdrop

It is common too, as users are asked to do small flexible tasks to be eligible to claim tokens. Most of the time companies ask users to do promotional tasks like signing up for newsletters and following and sharing adverts on social media channels.

• Holder Airdrop

Here is another common airdrop, which has been rewarded to users holding or accumulating a particular token. What happens is that a snapshot of the user's wallet is taken after a set time duration and is rewarded according to the amount they are holding. Recipients get airdrop depending on the amount held has met the threshold or move an=bove.

• Hard Fork Airdrop

This type is usually when there is a hard fork of a project. The user who follows the split will get the same amount as the hold in the previous original token. An example is Hive Fork from steem. From what I learned, those who moved to the hive platform had the same amount of hive as the amount of steem they held in their wallets.

STEEM token ever been claimed as a crypto airdrop?

Well, for the time I have been on steemit, I can for sure conclude if steem token had ever been claimed as an airdrop. So, I will be worried and will need clarification if the 15 STEEm delegated to the newly created account is an airdrop. I will look at it as an airdrop because it gives new users the ability to participate on the platform by buying steem to power up.

The users do not claim this steem, but it helps them to be able to post and vote. It is a market strategy to create awareness and keep new users on the platform until they can accumulate and move on without the delegated steem.

How to identify if a crypto airdrop is legit or a scam. How can we also find free crypto airdrops?

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• Some things to look out for when identifying an airdrop

• If the airdrop asked for your private key or recovery phrase, that red flag
• If the airdrop asked you to pay to claim, that is a red flag
• Check if the airdrop had a functional website, if not. that is a red flag
• Most real airdrops have a post on bitcointalk, so it is important to check.
• If the airdrop asked for any form of donations, it was fake.

• How can we also find free crypto airdrops?

I don't know how you find legit free crypto airdrops, The reason has been most I come across ended up being a scam.

How are crypto airdrops taxed?

I can't say for sure how it has been taxed, but I think it is a type of income and should be taxed. The only way a user can and will be able to pay tax will be when they have finally claimed the airdrop. So that will be done following the current price of the asset just like any other crypto asset. Unclaimed airdrops are not taxed, the reason being that by the time claiming. The value can change, which will also influence the tax.

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Advantages and disadvantages of crypto airdrops

• Advantages

Easy means of making a profit: With airdrop, most of the time the recipient is not required to do any form of hard tasks. As I mentioned, you can get airdrop just by holding or in some cases social media promotions.

Less expensive marketing strategy: Airdrop can be used to promote a project over a wide range without the company putting in any extra effort.

• Disadvantages

Unreliable: Airdrop is a tool used by scammers to send out phishing links to hack into users' accounts. It is sometimes used to give false market signals to crypto traders.

Difficulty in government regulations: Governments already have problems trying to regulate crypto. The presence of airdrops adding to the already existing native currency gives the government more work to be done to tax the user's income.

Disturbing future: Blockchain industries are still trying to plant their feet on the ground, which makes the future of cryptocurrencies unpredictable. If blockchain technology happens to be rejected in the future or high transaction fees, that will lead to losses.

Well, I will end here. Airdrops are a market strategy most newly created companies use in promoting their projects. It may be good for someone who wants to make fast cash, but note too it can also be a scam. I'm not a fan of airdrops, but I will plead whoever comes across this post should do some reading about any airdrop they are going into.

I invite
@crismenia, @ruthjoe @kuzboy

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Cheers
Thanks for dropping by
@fombae