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What is Cryptocurrency Airdrop?

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The innovation that cryptocurrency is bringing upon us is unending. The dominant theme or focus that made the coin a very acceptable one worldwide is its decentralized nature. The wide acceptability of these coins is significant sources of concern to some countries are trying to clamp down on cryptocurrency. Cryptocurrency comes in two forms, those that are controlled from a single source in a centralized fashion or those, like Bitcoin that are controlled by the market.

Cryptocurrency birthed ICO (Initial coin Offering), which serves as a means of crowdfunding for startups to generate money. Some countries like Bangladesh and South Korea are presently cracking down on ICOs.

A cryptocurrency airdrop is when a blockchain project distributes free tokens or coin to the crypto community. An airdrop is different from a fork, although both have the same similarities to you having a coin in your wallet. The idea behind the airdrop is straightforward; time is set and announced that the project behind an event will take place. Any trader that possesses Bitcoin or ethereum then is qualified to receive a certain number of free tokens. This can also be done on other blockchains, the cryptocurrencies that are mostly used are ethereum and bitcoin. The giveaways are not limited to only these coins alone other altcoins are also qualified for these. Sometimes for an airdrop requires you post on social media or you contact the Bitcointalk forums.

Airdrops are merely a free coin that is always given at a designated time. It can be before, during and after an ICO. A lot of the airdrop’s available today are just free coin which the developers are ready to discard once it reaches the exchange. It I part of the advertising strategy of the company. A lot of people see it as a scam by ICOs; another school of thought sees it as a way of promoting their ICO to the public.

Airdrop works like a seed. It’s something you sow, and you hope to benefit from in the future. Sometimes most ICOs use PR work to manipulate people, imagine reading somewhere that the free coin gotten is doing well, you are more likely to check it out to see how it’s doing. Airdrop is an advertising technique. Airdrop is a means of ensuring that currencies are in circulation and it is a predominant among new projects. It ensures that the coin is in the hands of potential users. It is an attempt to bootstrap the network effects. Airdrop is money from the sky, looking at the FIAT world; imagine if the central bank drops currency from the air, it will increase the currency in circulation. The question of tax liabilities has been raised in the United States.

The act of introducing airdrops by companies is not because they are trying to be friendly to potential investors; it’s a PR strategy. It is done to their token value. Airdrops works the way free advertisement works, people in the crypto community gets easily connected to their project, and everyone receives the same incentives

The endowment effect suggests that individuals value something higher if they own it. In the case of OmiseGO, there will suddenly be half a million people who see OmiseGO as more valuable than other tokens just because it was dropped into their wallets. Many will also keep on accumulating the currency now that they already feel like investors. Basic tendencies towards risk aversion, hoarding, and completions probably even come into play, with some being tempted to buy more OmiseGO to achieve round numbers, and increasing their current stack instead of diversifying further with new tokens they don’t know and thus consider to have a higher risk.

In the future more possible airdrop developments could be projects embarking on giving tokens to users who already hold tokens in a project that overlap or have some synonymy with their own.  Projects could also encourage others to airdrop their token and get some incentive in return. There is need to stay safe in the online space, two-factor authentication should be used to protect wallet and on no account should you give out your private keys or wallet info to anyone as a lot of people will want to hide under airdropping to steal funds. If you are an investor holding a diverse portfolio of coins you are likely to be receiving more and freer money as this concept keeps gaining popularity.

 

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