steemit crypto academy contest season 12 week 01 - understanding cryptocurrency airdrops

Good morning friends, I am really glad participating in this educative entry about airdrop, airdrop is a very famous term in the crypto word. Hopefully you enjoy the article as you read through.

A crypto airdrop is a famous marketing strategy used by by developers of crypto projects where the freely share their cryptocurrency to specific number of people whenever a condition is met at a particular period of time. This a method of gaining popularity, investor and holder in the crypto world, most popular and successful coin in the market followed the procedure to achieve greatness

As i had said earlier crypto airdrops are used to raise fame about a new crypto project or crypto coin. This deverloper do this free give away to investors both big or small and promise investors that if the hold the coins, in a shorter period of time the value would be very very profitable. In some projects this promise comes to past while other trends to fail. There are also different types of airdrops in the crypto world, some comes totally free to holders of a parent coin for example tron Blockchain airdrops jTRX and Jst to tron holders.

While some other project like Candy gave an airdrop to users who bought specific amount of Candy during the airdrop period on bybit crypto exchange, then others rewards you with airdrops for referring users to their site.

Even though many successful project started from this route, many scam Blockchain project uses this approach to loot millions of dollars from host of investors trying to make an income honestly. While some also use that medium to hack their victims account.

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Give the different types of crypto airdrops

As u had earlier said crypto airdrops are received in different methods, condition and targeted investor's. Below are famous types of crypto airdrops that has grown popularity over the long period of time:
✅ The Common Airdrops: as the name implies this are the most common ways coins and blockchain projects are received through airdrops, in this type of airdrop investors receives airdrop if only the are holder of another specific coin. For Example this happened after the crash of LUNA coin, in other to compensate traders and investors affected by the crash, LUNC coins was airdropped to all holders of LUNA coins

✅Fork Airdrop: This is another similar type airdrop, its quite similar to the common airdrop just that an upgrade or splitting of the Blockchain is necessary before an airdrop occurs. For example ETHPOW was airdropped to Ethereum holder after an upgrade on Ethereum Blockchain.

✅ Promotional Airdrops: promotional airdrops as the name implies are airdrop that focus on promotion and promoters, unlike other airdrops where you need to hold a coin to be eligible, here you get free airdropped coins are given to users who help promote the new Blockchain project. I was luck to get some DODGE and ECOIN coin through this method because i refered some new users into their project and following their pages.

✅ Hold and Earn Airdrops: I said something about this earlier in this post, tron Blockchain do airdrop tokens, NFTS or coins to holders and freezer of tron assert. This is to encourage users to continue hold their coin to get extra cash, assert or money.

✅ Private Airdrop: As the name implies this type of airdrop are shared among specific among wealthy investors or partners in the Blockchain technology. This type of airdrops are done secretly with out letting the public hear about it

✅Gaming Airdrops: In this world now airdrop are given to specific user or gamers of blockchain based gaming platform, airdrops could be shared among users if specific ranking or users who purchases any in app feature or tooil

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Have STEEM token ever been claim as a crypto airdrop?

No, steem coin has never been airdropped to users like other coins did, though the closet thing to airdrop was the hive coin, which was airdropped to hive users that were holding steem. This occurred after the steem Blockchain experienced a hard fork some years ago, If you read about the different types of airdrop i wrote above, you would see that it was an example of fork airdrop.

In other words no STEEM airdrop was ever recorded on steem blockchain, instead Steem has always been distributed as a reward to hardworking content creators on steem blockchain. Unlike other centralized social media platform like Facebook and Instagram where users rarely get rewarded for their engagement, steemit is one of the first social media platform that supported its usees for their engagement.

In summary the hard fork was as a result of a disagreement between some old witness on steem Blockchain and Sir Justin sun with lovely current witness on steem blockchain, the had issues because of two main things (steem-tron integration and power down time). It's a really long topic of it's own so I will save the details on another post, the good thing is Justin sun defeated them and we have our decentralized steemit back.

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How to identify if a crypto airdrop is legit or scam. How

✔️Confirm from the official project website:
Whenever you see a news or link that has to do with an airdrop update, make sure you confirm the how truth it is because there are so many fake airdrop news update in the internet, while some are just phishing links used by hackers to illegal access your funds or device.

✔️Confirm from official social media handle:Incase where you can't find their official website, you can do well to search their offcial socal media handle in any trusted social media like steemit, Facebook or Twitter also known as 'X'. Also keep in mind that there might have fake accounts on the trusted social media , so therefore it's expected that we check to confirm their legit social media before entrusting or participating in an airdrop.

✔️The Requirements or Condition: legit airdrops conditions that has to be met before you are credited with the coin. In most cases the most common condition for receiving the airdrop, are referring a friend, following their social media page, filling out some form with little details or share their promotion link. Any airdrop campaign that requires you dropping valuable information are very suspicious and should be avoided.

✔️Sounds too-good-to-be-true offers: It sounds so so suspicious when the airdrop campaign promises to give away a very large amount of asset to it's followers, some airdrops promise millons of dollars worth of asset to anyone who participates in the airdrop. This is very suspicious because if they actually have that amount of money they wouldn't host the airdrop.

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How are crypto airdrop taxed ?

The coin airdrop tax of crypto airdrops is a very valuable aspect of crypto airdrops, although the airdrop tax varieties on the locality or nationality, that it might be higher in some countries and lower in other countries. Crypto airdrop are expected to be taxed to help balance the economics and financial law governing the nation. The guidance are classified into different branches or type as listed below

☑️ Income generated Tax: In most countries, the total amount and value of the crypto received in an airdrop is calculated just as ordinary income at the current market price on the day you were credited with the coin. That's is to say it would be added to your next tax bill, your value if the current coin would be add regularly to your next tax bill.

☑️ Capital Gains Tax: The case is expected to change when the received token or coins sold to make profit, that is to say you would be taxed if the airdrops asset eventually grows value and you sell it to make awesome profits. The tax would be based on the the profits you generated from the airdrop but the cost basis of the airdropped asset would be fixed on it first and initial value when the coin was credited to you.

☑️ Gift Tax: As the name implies this tax come s into play whenever the asset is received as a gift, this case scenario is rarely seen because only few countries implement such tax or in other countries this tax is triggered when a specific amount it hit or received. In other words the tax affects users with very large quantities that hit the limit point. The good thing os that only few countries implement this particular rule/ tax.

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Have you ever claim a crypto airdrop before? Which coin was that?. If you haven't claim an airdrop before then explain how one can claim a crypto airdrop

Yes, I have claimed some airdrop in the past most recently i claimed some airdrop on tron Blockchain , Tron rewards users who freezes their Tron with numerous airdrops

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jTRX token, S-USDT-TRX token, Bttold token, JST token CHOC token, PAL token, PRINT token, LOVE token, BAT token, RoLex token, XMR token, TTC token, TENC token etc

I don't actually know the day of all this airdrops, all i knew is i am always get airdrops that are created on tron Blockchain, although some have turned out to be falled projects others have been doing we'll by achieving success and value

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Advantages and disadvantages of crypto airdrops

Advantage	Disadvantage
Community Building	Scams and Frauds
Promotion and Marketing	Lack of Quality
Free Tokens	Privacy Concerns
Diversification	Regulatory Risks
Inspiring Holders	Difficult condition

Source

Advantages:

✅ Free Tokens: Airdrops gives investors free Blockchain tokens, giving them a chance to make big profit for just believing and holding the coins for a particular period of time.

✅ Promotion and Marketing: All thanks to airdrop that why many current successful project came into light, or thats to say airdrop gives developers a chance to make the project successful and famous by increasing the numbers of holders of their newly born coin or token or Nft.

✅ Community Building: Airdrops has proven to be a legit way or manner to bring together the development team, coins holders and promoters of the project in a single platform for easy communication among members.

✅ Inspiring Holders: Airdrops can trigger users to hold new token for a longer period of time because there is a goal to be met, this has proven to be a sincere cause of a stable Market for a healthy coin growth.

✅ Diversification: An airdrops helps create a reason to diversify one's crypto project, just like the case if Bitcoin and Bitcoin cash or Ethereum and Ethereum classic .).

Disadvantages:

❎ Scams and Frauds: many people have fallen victim of scams and different other fraudulent activities because they were looking for airdrops to participate in.

❎ Lack of Quality: Not all token or coin airdrop end up successfully, thats to say some never have reasonable value's or worth.

❎ Privacy Concerns: some airdrop project are just there to steal data and information and sale them to companies or industries

❎ Regulatory Risks: As i wrote above many countries tax all users who participates in airdrops most especially the European countries.

❎ Difficult condition: Some airdrops requires user to perform very difficult conditions, or task that might discourage or frustrate investors.

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Conclusion

In conclusion I would say airdrop is a very powerful project that has made the crypto word fun and interesting, hopefully I believe more people will keep participating In airdrop to help grow the crypto world.

Thanks for going through, always remember starrchris cares ❤️, I am inviting my friends

@ngoenyi @cryptoloover @sahmie @badmus-official

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