What Is A Crypto Airdrop And How Does It Work?

First, to get the essence of airdrops, imagine something in between giveaways and ICOs (Initial Coin Offerings). In other words, an airdrop is an opportunity, with some exceptions, to receive tokens from a startup for free. And no, you don’t need to be a close friend of Vitalik Buterin or a member of any secret club. If you wish to get tokens for free, all you have to do is complete several simple tasks, the list of which varies depending on the project: subscription, repost, tweet, etc. As you see, the mechanism is quite easy.

But what’s the point for those who issue tokens? Why do they give their assets away? Well, let’s speculate on the benefits of airdrops for startups:

A Good Claim to Fame

As with any other giveaway, an airdrop is one of the word-of-mouth marketing instruments. It aims to make you talk about the project.

By distributing free tokens, the founders of startups expect that you:

a) will talk about this action in your social networks, thereby urging your friends to do the same.

b) will follow the project’s updates and share your ideas on how to tackle its flaws.

Thanks to you, the project will be heard, seen, and discussed.

Money Talks

An airdrop can also be a warm-up before rounds and IPO. Now there are fewer credulous angel investors, so startups should have a solid margin of safety to attract the attention of financial heavyweights. Airdrops allow a startup to prove its liquidity and start scaling, as it has supporters and, therefore, worth.

Knowledge is Power

However, it also happens that the airdrop’s goal is to spread knowledge. For instance, such actions are crucial in the markets where only a few realize what to do with crypto.

An excellent example of some kind of airdrop is El Salvador. There, the government plans to distribute a couple of free Bitcoins to citizens to show how they work. In this case, an airdrop is necessary because people will not pay with crypto until they understand it.

All in all, airdrops contain both benefits and risks because every promising idea can either become everyone’s favorite or fold up being neglected. However, it’s always up to you. No pain, no gain, as worldly wisdom says.

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