With the rise of cryptocurrencies in recent years, owning a fraction of a token has proven to be a profitable investment.
However, the sporadic price fluctuations can be disheartening—especially for investors.
That’s where airdrops come in.
This is a free way to earn tokens without running a financial risk.
Continue reading to learn about airdrops and why you should consider them if you’re looking to diversify your investment portfolio.
What are Airdrops?
An airdrop is a promotional technique where block-chain based projects and developers send out newly-minted tokens to various individuals. It is generally done to encourage adoption, spread the word, and invite investors.
Types of Airdrops
Standard Airdrops
This is a free-for-all airdrop where newly-minted units of the currency/token/coin are transferred to wallet users. The wallet users may have to perform some service like subscribing to a newsletter.
Bounty Airdrops
This is perhaps the most common form of airdrops. In this case, the participant has to perform a task to be eligible to get the coins deposited in the wallet address provided.
Generally, the tasks are promotional ones and might involve sharing a post or following a page on facebook, following an account on twitter or retweeting a tweet, or joining a telegram group.
If the handlers of the airdrop are satisfied with the tasks, upon completion, the participant will be credited as payment for the performance.
Exclusive Airdrops
This type of airdrop is open to a select group of people and is usually carried out to reward loyalty of existing patrons of the blockchain-based project.
Holder Airdrops
In this instance, holders of a token are rewarded in an airdrop. This type of airdrop is open to the public provided the participants hold the base token.
Who can participate in an Airdrop?
Generally, anybody with a wallet address can participate in an airdrop. Since the token will be sent to a wallet address, getting a crypto wallet is a good first step.
The only types of airdrops not open to the public are those reserved as loyalty benefits for existing patrons (Exclusive Airdrop) and Airdrops sent to holders of a token(Holder Airdrop).
Advantages of Airdrops
Participating in airdrops is a hassle-free and economical way to hedge against investment risks and diversify your portfolio.
Although the prices of tokens fluctuate—except stable coins—the free coins will not damage your finances even if the price plummets since you didn’t invest any of your money.
For the block-chain based project and its developers, carrying out airdrops is a cheap and effective marketing technique.
If the airdrop is carried out properly and garners positive reactions from the public, then the developers have an opening to educate the public and position themselves for funding.
Disadvantages of airdrops
Just as with anything, an airdrop can prove to be a disappointment. It could be a sad case of the whole operation folding and the received tokens becoming useless, or recipients cashing out their stakes once it is listed in an exchange—which would, ultimately, cause the price to plummet.
For the project handlers, if the airdrop is not strategically handled, they stand the risk of wasting their funds with little to no interest.
Are airdrops a scam?
An airdrop is carried out for promotional reasons or to reward loyal patrons: it is not a scam.
However, some people have resorted to hiding under the shield of airdrops to carry out scams. Even the most seasoned crypto enthusiasts have fallen prey.
Note that you will not be asked to divulge sensitive information—passwords, key phrases, seed phrases—by a legitimate airdrop site.
Neither will you be asked to make an initial deposit into an account or to send a token to a wallet address. Perform your due diligence and confirm their authenticity before engaging with any platform to avoid being scammed.
How to take part in an airdrop
1. The first step is to have a cryptocurrency wallet. This is where you will receive your tokens.
2. Stay updated on the trends in the cryptocurrency community and you can do this by following the handles and hashtags on the various platforms.
3. Hunt out legitimate websites that provide airdrop news. You can subscribe to their newsletters to be instantly alerted of the best airdrop opportunities.
Conclusion
Airdrops are amazing but, as with anything, should be approached with caution. To avoid getting scammed, make sure you do your research. A good rule of thumb is to avoid handlers that ask you for sensitive details.
For more information, visit our Active Airdrops page with Airdrops filtered directly from Airdrop Alert. Our feed lists all ongoing Airdrops, the token details, and the distribution amount.
There are many other sites with verifiable Airdrops that you can participate in. Browse through the different categories on these sites so that you can make an economical decision about your participation.
