DTUBE - Crypto 101: 4 Things You Didn't Know About Airdrops

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Learn how to get free cryptocurrency coins & trade these crypto tokens for Bitcoin & Ethereum on exchanges.

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Script:

1. What is an airdrop?
   Airdrops are just another term for free tokens or coins. It’s an effective way for companies to market their coin by suddenly making the masses aware of it when it appears in their wallets out of nowhere. Doing so increases awareness of the coin in an attempt to also increase its value. People tend to personally value coins they own over coins they don’t own due to what’s known as the “endowment effect.” There are currently over a thousand coins listed on coinmarketcap.com, and it’s hard to keep track of them all. By airdropping a coin into your wallet, it tends to stand out more in your mind amongst the rest of the competition. The amount of coins you receive from an airdrop vary, but most of the time you have to be holding coins of a relevant blockchain. Take OmiseGo for example. In September of 2017, close to half a million Ether holders who held a minimum of 0.1 Ether the previous July were given 0.075 free OMG tokens for every Ether they held in their wallets. This, among other things, played an effective role in the project’s marketing efforts & OMG is now ranked among the top 30 coins based on total market cap.

2. How can I participate in an airdrop?
   As I stated earlier, you have to be holding coins of a relevant blockchain in order to be eligible to receive free coins. Most ICOs for example, are ERC20 tokens, meaning they’re built on the Ethereum blockchain. So like OmiseGo, you have to be holding Ether in your wallet to receive free ERC20 tokens. Conversely, if the project is based on the Bitcoin blockchain, you have to be holding Bitcoin. The timing of the airdrop can be announced beforehand or can be random (as is the case with Waves and Komodo). In order for an airdrop to occur, a snapshot of the blockchain is taken at a predetermined date & time. Anyone holding relevant coins at this time is entitled to a portion of the allocated amount of free tokens. In our previous case of OMG, the snapshot occurred on July 7th, 2017 at block 3,988,888. But the announcement of the airdrop wasn’t made public until August, and the OMG coins weren’t distributed until September. Sometimes, announcements made beforehand can have a huge impact on the value of the relevant coin. For example, in early December of 2017, Nxt announced an airdrop of the Ignis token to all Nxt holders. This led to a massive surge in the price of Nxt to over six times its original value over the course of the upcoming days & weeks. Once the snapshot was taken & Nxt holders were accounted for, the value of Nxt tanked to a fraction of its pumped price, which was also the coin’s all-time high. Moral of the story: be careful when stocking up for free coins because doing so can burn you! The number of coins you receive can sometimes be a fixed rate, while other times it’s determined by how many coins of the relevant blockchain you hold (like in our OmiseGo example of 0.075 OMG for every 1 ETH). I have to warn you though that although some exchanges will honor the airdrop, there are some that won’t. One way of ensuring with 100% certainty that you’ll be receiving your free coins is by holding the relevant coin in a wallet to which you own the private keys. You do not own the private keys to an exchange. In the case of Bitcoin, this means sending your Bitcoin from the exchange to either a hardware wallet (like a Ledger or Trezor) or to an online wallet (like blockchain.info); an example of an online Ether wallet would be myetherwallet.com (also referred to in the crypto-community as MEW).

3. What do I do with my airdrops?
   As you may have already figured out by now, airdropped coins are essentially free money, and what you decide to do with them is up to you. Many of the coins that perform airdrops would have just recently wrapped up their ICO and therefore, the tokens aren’t immediately available to trade on any of the major exchanges. That said, there are still a number of exchanges you can trade them on, and for some, it’ll only be a matter of time until they’re listed on a major exchange. Once listed, liquidity is much higher since the tokens are exposed to larger trading volumes. This also means more room for growth in the coins’ value due to awareness, speculation, or other factors.

4. More free money
   While we’re on the topic of free money, it’s worth mentioning bounties. Bounties are another way for you to earn free coins. Rather than having to hold a coin from a relevant blockchain, you can earn coins early on during its ICO or pre-ICO stages. The coins are earned by performing designated tasks to help improve the project: be it translating their website to another language, finding bugs within their system, or even promoting it on social media if you have a big enough following. Yes, that means a simple Tweet can earn you coins if your fanbase is deemed large enough by the token team’s criteria. You can find out more about an ICO’s bounty programs by visiting their ICO announcement page on the bitcointalk.org forum.

Disclaimer: This is not financial advice. I absolve myself of all responsibility (directly or indirectly) for any damage, loss caused, alleged to be caused by, or in connection with the use of or reliance on any content, goods or services mentioned in this article. As usual, DYOR.

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