Decentralized finance regulation is gaining popularity in the finance market fast. Crypto airdrops play a crucial role in sensitizing traders together with the public about new virtual coin startups joining the crypto space. With more than 6000 virtual coins in the crypto market, companies have to apply diverse marketing methods to lay a solid foundation for the new coins. The marketing methodology includes social media posts with an incentive attached, website posts explaining more about the new coin, and google my business posts (GMB).
Companies’ common marketing technique to promote upcoming startups is the crypto airdrop. Traders get awarded free coins after posting about the new currency on interactive media platforms, on their websites, or purchasing the new coin. To gauge how effective this marketing technique is, let’s look at how crypto airdrops work.
What Are Crypto Airdrops?
Crypto airdrops are freebie virtual coins offered to active crypto coin traders to create awareness about the emerging currency in the market. The company sends tokens or virtual coins to the wallets of active traders in a platform for free or in exchange for a simple activity that creates awareness. A trader receives free coins after sharing a post on social media or purchasing some new currency. The incentive encourages traders to share the new coin with various groups of people hence boosting awareness.
When a company offers free coins during the initial currency offering, the number of traders using the currency increases, giving it a solid foundation. You can grow the number by posting on your website and social media pages.
To qualify for a crypto airdrop, you should have a wallet with a certain minimum number of coins in it. You may be required to complete a task before you are rewarded, such as sharing a post or leaving a comment on a website, writing a short review about the new coin, or acquiring a certain set amount of coins to your wallet. The use of airdrops is a promotional activity and involves a small number of coins. If a company requires you to buy airdrops or make a minimum investment in their company to qualify, that is a scam; avoid it.
Types of Crypto Airdrops And How They Work
There are four main types of crypto airdrops :
- Bounty Airdrops which crypto users receive from the company after performing a promotional activity such as making a social media post about the latest crypto airdrops.
- Exclusive airdrops which long term users of an established crypto coin like Ethereum receive to spread awareness of a new virtual currency or token
- The holder airdrops given to traders in specific crypto coins, such as etherium receive an incentive to spread information about a new token or currency in the crypto space for a new company. The airdrop is suitable for seasoned traders.
The primary function of new crypto airdrops is to create awareness of an emerging currency in the market. The company offering the coins and tokens makes small deposits to the wallets of active traders in the market for free while promoting it on their website. Promotion by the traders of other established currencies can reach a wide audience by:
- Sharing an informative post about the latest cryptocurrency and how it works on their social media platforms and websites.
- Writing a short post about the new virtual currency and sharing the post on multiple platforms to reach many potential investors.
- Trading on the new coins and tokens and giving a short review about the products to other crypto users and the general public through social media posts and blogs on their websites.
Are Crypto Airdrops Safe?
All legal crypto airdrops are safe to trade with, but some airdrops are illegal. While airdrops in crypto should play a promotional role only, some pump-and-dump-schemes are hiding under the free airdrops crypto seeking to hike their coins’ price through attractive false statements. Such schemes are common for coins that already have a solid foundation in the crypto market, but the owners are seeking to make undue gains from unsuspecting new investors.
After they register a price boost, the pump-and-dump schemers will sell their shares at a high price. The huge sales volumes result in a drop in the market price of the shares that make investors suffer huge losses.
A trader should conduct adequate research about cryptocurrency before commencing to trade their free airdrops. If a coin or token is already established in the financial market, you should avoid it since airdrops are meant to sensitize people about new currencies. Also, if free airdrop crypto seeks a capital investment, you should avoid it since the primary purpose of airdrops should be creating awareness and not initiating or boosting purchases.
Once you establish the legitimacy of upcoming crypto airdrops, you can trade in them, share information about it with your friends, and lay a foundation for them in the market.
Advantages And Disadvantages of Crypto Airdrops
Airdrops in crypto are essential in making a coin stand out from the rest in the market. Many merits and demerits come with airdrops.
Advantages
The advantages of using crypto airdrops include:
- They enable a company to create awareness about a new virtual currency in the market without incurring many expenses. The exercise is simple, give a few free coins to seasoned investors and gain publicity fast in return. The use of airdrops is cheaper than the traditional methods of advertisement.
- Token airdrops stir curiosity among traders pushing them to seek more information about the free airdrops and learn about an effective way of raising funds for community projects. Wallet holders with low capital or none receive a boost in their wallets and can trade with the free coins to earn profit.
- After the initial coin investment, investors and the company gain profit as the value of the crypto grows, this is a win-win situation. For the company, profit and a solid foundation get into place, and the trader earns a profit.
Disadvantages
Here are some disadvantages of crypto airdrops
- If the company gives out very few tokens or coins to investors, it may receive minimal marketing and end up incurring losses.
- Some traders may sell the free coins before creating awareness to their friends and networks when they speculate a future drop in the market value of the coins. The company ends up missing its goal after spending its coins.
- Scammers hiding under the free airdrops umbrella take undue advantage of traders from false marketing stunts, leaving traders to suffer losses after the former selling their shares at high prices.
- When a company gives out too many coins and tokens to traders, it may remain with zero coins or tokens and have to buy some coins back from traders and pay for tokens that they freely donated.
- Hackers may lure unsuspecting investors into providing their wallet private keys and details with a promise to receive free coins and tokens, which the former sell to third parties, leaving their victims at a loss.
Before trading and spreading information about a new token or coin in the market, you should dig out for more details about it, such as the registration status of the company, length of stay in the virtual market space, and whether it is certified to avoid falling into the scammers’ trap.
Key Takeaways
Crypto airdrops are free giveaways added to people’s wallets to create awareness about a new startup in the virtual marketplace. If an airdrop is pegged on a given minimum investment, you should avoid it.
Companies give free crypto to investors’ wallets through blockchain technology, which may create a loophole for cyber hackers and scammers asking for your login details and passwords. Never share your passwords or details with individuals so that they award you free coins and tokens.
You can trade with and earn profit from crypto airdrops, but you should study the market trends and sell at favorable prices.
