While most Apple users will be familiar with the term ‘airdrop’, this cryptocurrency marketing trend has nothing to do with the Apple feature.
In the cryptocurrency industry, ‘airdropping’ means distributing new tokens to holders of existing coins. Developers that create a new cryptocurrency would give away tokens to cryptocurrency investors or traders for free. All people have to do is apply!
Aside from the initial requirement of being a holder of existing coins, some developers will have additional requirements or set criteria to see who gets free tokens. For example, cryptocurrency Onthology gives their free ONT tokens to NEO coin holders but on March 7, 2018, they had completed their airdrop of their ONT tokens to subscribers of their newsletter as well.
Others reward additional tokens to people who have referrals. Some companies even have airdrops instead of ICOs.
Airdropping has been quite popular among new cryptocurrencies. But why would companies choose to give out tokens for free when they can make money off of them by selling them like in an ICO?
We’ve narrowed down four possible reasons:
Easy and effective cryptocurrency advertising
The news of a free token giveaway will certainly attract more people than traditional advertising methods and ICOs would.
With ICOs, a lot of people hesitate to invest as they put their coins at risk. Even if someone is really interested in a company’s project, if he doesn’t feel comfortable spending his crypto, he won’t. Airdrops take away the fear of losing money. People can just dive right in.
Getting more people into cryptocurrency
Many believe that the true power and value of digital currencies will be seen with widespread use. It’s not a secret that digital currencies, even being the revolutionary technology that they are, are still not widely used by the public.
Giving out free tokens via airdrops makes cryptocurrencies accessible to anyone and can help towards the goal of mass adoption.
Jacking up the price of the main cryptocurrency
Holding airdrops may make people buy an existing coin in order to qualify for free tokens in an airdrop. This would in turn increase that existing coin’s price.
Let’s say company A holds an airdrop of its cryptocurrency A tokens for Ethereum holders. Exclusive Bitcoin holders who are interested in the project may buy ETH so they can get free A tokens. ETH prices may rise due to the sudden demand.
Avoiding ICO regulations
ICOs and token sales have been completely banned in China and the US has upped their regulatory game when dealing with ICOs amidst all the ICO scams.
Holding airdrops in place of ICOs means companies don’t have to deal with regulatory bodies.
What do you think about airdrops? Does you think it is a great way to get word of a good project around or does it open doors for scammers and spammers?