Airdrop
What is a cryptocurrency airdrop?
An airdrop, as it pertains to cryptocurrency, is a marketing stunt that involves sending coins or tokens to wallet addresses in order to promote awareness of a new virtual currency.
Small amounts of the new virtual currency are sent to the wallets of active members of the blockchain community for free or in return for a small service, such as retweeting a post sent by the company issuing the currency.
The airdrop is a promotional activity typically performed by blockchain-based startups to help bootstrap a virtual currency project. Its aim is to spread awareness about the cryptocurrency project and to get more people trading in it when it lists on an exchange as an initial coin offering (ICO).
Airdrops are generally promoted on the company's website, as well as on cryptocurrency forums, and the coins or tokens are sent only to current holders of the cryptocurrency in crypto wallets.
To qualify for the free gift, a recipient may need to hold a minimum quantity of crypto coins in their wallet. Alternatively, they may need to perform a certain task, such as posting about the currency on a social media forum, connecting with a particular member of the blockchain project or writing a blog post.
Advantages and disadvantages of crypto airdrops
Advantages
Given the extreme competition among cryptocurrency startups, an airdrop is an attempt to stand out from the crowd. Some businesses devoted to crypto airdrops offer alerts to users and listing services to startups, plus a range of marketing services to fine-tune their airdrops.
Airdrops can also raise engagement and awareness in the community, which can attract new eyes to the project and thus potentially improve its chances of success.
Disadvantages
However, there have also been warnings about cryptocurrency airdrops from others in the industry. For example, Pierre Rochard, the founder of Bitcoin Advisory, tweeted a caution that crypto airdrops are often used as pump-and-dump schemes. That is, owners of the cryptocurrency could be artificially inflating its value in order to make a quick profit.
What is an NFT airdrop?
Similar to other types of crypto airdrops, an NFT airdrop credits NFT community holders with additional tokens. This is done to build a stronger community around certain NFTs, create buzz and reward NFT holders.
For example, Bored Ape Yacht Club holders were airdropped over 10,000 ApeCoin tokens. At their peak value of nearly $24, these airdrops were worth well over six digits, assuming users held their tokens.
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