What is a cryptocurrency airdrop?
What is a crypto airdrop?
A crypto airdrop is when a blockchain project distributes free tokens or coins to the crypto community.
To be a recipient of an crypto airdrop often the only requirement is that you have coins from the relevant blockchain stored in your wallet. Examples of this format of airdrops are Byteball, Stellar lumens and OmiseGo. These airdrops required you to proof you were the owner of Bitcoins or Ethereums at a certain time ( snapshot) of the blockchain.
The format of these crypto giveaways is usually like this: At a pre-announced time the project behind the event will take a ”snapshot” of the blockchain, anyone holding Ethereum or Bitcoin at that point will receive a certain number of free e-tokens. This can also be done on other blockchains, but Ethereum and Bitcoin are the most used for this airdrop format.
Other (often smaller) airdrops require social media posts or you need to contact a member of the team on the Bitcointalk forum. This form is gaining more popularity since September 2017. It's currently a hype to just fill in a google form with your email, telegram, twitter & wallet address to get free tokens. This format is often used for new crypto projects that are using airdrops as a marketing campaign.
Another possible way to get free e-coins is a faucet. This means you get a small amount of free crypto for a longer period of time. Some wallets, crypto casino's or crypto promotion sites run this type of airdrop.
You might wonder, why would anybody give away free cryptocurrency?
I have wondered the same and my thoughts on this are the following;
To offer coins for free the people are the product. With doing an airdrop the project creates awareness about their ICO or token. It brings people to the project that otherwise would not have owned or heard about it. It could lead to token price appreciation, since people value a token they own higher then a token they don't own. This is called the endowment effect: "In psychology and behavioral economics, the endowment effect (also known as divestiture aversion and related to the mere ownership effect in social psychology) is the hypothesis that people ascribe more value to things merely because they own them." In addition to that I think people are more likely to buy a token that they previously owned or still own, since they are already familiar with it.
A crypto airdrop would create a community/network of people who own the tokens. If you would list the token distribution after an ICO in a pie graph, a large part of the pie is still owned by the Dev's or project. Another large part is owned by people who joined a pre-sale. And a reasonable part is owned by people who invested in the ICO. An airdrop adds a extra slice to the pie and that slice will have the most people in it. Decred still shows a pie-graph like this example on their homepage (https://www.decred.org/)
An crypto airdrop also plants a seed. When you look at coinmarketcap you will see a list of thousand coins. Just on page one you can see 100 coins listed. However if you have or had a coin that name is still in your brain. The seed is planted and whenever you check coinmarketcap and scroll down, the name of the free e-Coin will jump out and people will check how it is doing. If they see an article that the free e-Token is doing well or bad, they are more likely to click it if they own it or previously have owned it. It's just like advertising!
Aren't there free e-Tokens worthless?
NO they are not! Byteball is distributing airdrops to Bitcoin holders every month. The price of Byteball surged to over $900 per Byteball in mid july 2017. OmiseGo gave away free OMG tokens to Ethereum Holders, the price of OMG tokens surged to $ 12 in September 2017. Most recent eBTC airdropped 2500 eBTC tokens per applicant, on day 1 of hitting the exchange the price rose to $0.80 cents per token, which means the airdrop was worth 2000$ ! The only requirement for this airdrop was to sign up with your email and wallet address. The easiest $2000 I ever made!
Of course the airdrops I mention above are the ones that stand out. Most of the crypto airdrops I apply to are worth between 1-50$. However this is all free money. You can either sell these tokens to collect more Ethereum & Bitcoin, or you hold them and hope for a price surge.
Where can I find information about new airdrops?
There are many websites and twitters that post about new crypto airdrops. However many of them mostly post referral links from which they get paid if you join. Be careful clicking on random links that require your wallet details. Personally I use the website: https://airdropalert.com/ to find information about upcoming, active and past airdrops. I have good experience using this website to get my free crypto and stack up those Bitcoins!
I would like to state: NEVER give away the private keys of your crypto wallets and never download suspicious wallets of project you don't know.