What is a Crypto Airdrop?

As it relates to cryptocurrency, airdrops are largely used as a marketing tool. A FinTech company will send coins or tokens to digital wallets of users in their community to promote their cryptocurrency and to encourage interest and/or further acquisition of that currency. This is most common when a startup is launching a new coin and wants to drum up a new customer base. In this scenario, the company sends the new token(s) to the wallets of active members of their blockchain community for free. Like if you have a Solana wallet you might get an airdrop from a memecoin on the network, or in the case of a “bounty airdrop” tokens would be sent in exchange for something like retweeting a post sent by the company issuing the currency. The practice is not dissimilar to a company sending out promotional discounts before the launch of their online or brick-and-mortar store, the significant difference being that tokens sent through airdrops can be cashed out in hard currency.

What Do Prospective Airdrop Recipients Need to Know?

As we have written about before on the blog, it is important for all crypto customers to look out for scams, and the same rules apply to staying vigilant against such scams in airdrops. With bounty airdrops in particular, scams have been known to happen under the veil of social media giveaways. Other airdrop scams may include fake airdrops or fake key scams, where nefarious third parties try to get a hold of a customer’s money or private key under the pretense of airdropping a token in return. It is vital that customers never give out private key information or connect their digital wallet to an untrusted party, so be sure to check the website, send some emails, and look up what people are saying online about any particular project to make sure it is legitimate. Always take the temperature of how other investors and leaders in the FinTech space are responding to a potential venture before proceeding further and understand crypto is inherently risky.

Here's a practical tip: if possible, create a special wallet just for airdrops, and transfer the contents of that wallet whenever you can.

Aside from the risk, most airdrops have criteria that links to how active somebody is on the blockchain or online community. Because airdrops are usually about marketing, the issuer wants to send to people who with likely use it or who will influence others to use it. Airdrop listing sites will say the criteria for any given airdrop.

What’s Next?

You may be saying to yourself: an airdrop sounds great, but how will I know when the next one will happen? Luckily, a simple keyword search in your favorite online search engine should lead you to some websites and newsletters that have aggregated upcoming airdrops, as far as they are known. Even websites like Yahoo will publish these forecasts. Keeping your financial safety and online security always in mind, airdrops can be a fabulous way to get in on the ground floor of a new currency and may be worth exploring.