In this article, you will learn what is the definition of airdrop in crypto. Traditionally, airdrops are a marketing strategy that crypto projects employ to incentivize the use of their platform. New projects may airdrop crypto into your wallet as part of an initial offering, or as a reward for promoting the brand.
What is the Definition of Airdrop in Crypto?
In the world of crypto, an airdrop is a marketing stunt, in which tokens or coins are sent out to blockchain wallets. Most commonly, it is done to promote a new token or cryptocurrency.
A crypto airdrop is a transfer of free cryptocurrency from a crypto project into users' wallets.
There are several situations where one might decide to initiate an airdrop, but the effect is always the same—the crypto investor receives some amount of coins or cryptocurrency tokens, often for free or for executing a simple task.
Usually, this is done without any cost to the receiver. Sometimes, this is done at random, or recipients are specifically selected after an initial promotion of the upcoming airdrop.
Recipients may be required to do something to promote the digital asset themselves, such as a retweet. Airdropping exploded in popularity during the crypto coin boom of 2017.
What are the Pros and Cons of Crypto Airdrops?
Crypto airdrops could be a way to bolster your crypto portfolio without having to buy digital assets. They could also help you get on the ground floor of a new platform.
However, airdropped assets could just as easily be worth nothing. You could spend time looking for and claiming airdrop opportunities, only for the price of the airdropped coin to drop before you have a chance to sell.
Even worse, there's the risk of giving money or sensitive information to a fraudulent platform.
It's more likely that airdrops are worth pursuing if you're a crypto enthusiast who enjoys keeping up with new developments, and actively manages your portfolio on a frequent basis.
What are the Types of Airdrops?
Four types of airdrops exist:
- Standard airdrop: A standard cryptocurrency airdrop transfers an amount of native coin or token into existing wallets as a marketing strategy.
- Bounty airdrop: This is the most common type of airdrop, and is used to promote and create hype around a new token or coin.
- Holder airdrop: This is done to reward holders of a certain token or coin for their loyalty. Therefore, the requirement of a receiver is to hold the token or coin in question at the time of the airdrop.
- Fork airdrop: This is done when a blockchain forks, such as when Bitcoin Cash forked from the Bitcoin blockchain in 2017. In a fork airdrop, participants will be required to hold the coin of the pre-split cryptocurrency, and then will be given coins of the new forked cryptocurrency in the airdrop.
Bottom Line
The first airdrop in any form can be traced back to 2010. and the first Bitcoin faucet. At the time, the incentive was 5 BTC for participants who completed certain tasks. This article is about what is the definition of airdrop in crypto.
