Steemit Crypto Academy Contest / S12W01 - Understanding Cryptocurrency Airdrops
 |
|---|
Greetings everyone and welcome to my engagement post for the Crypto Academy community, hope you get to learn something new as always from this week's topic of discussion. This week, we are discussing our understanding of cryptocurrency airdrops. I know you like free things too so don't miss it.
Define what is crypto airdrop. |
|---|
Crypto Airdrops are defined as methods employed by cryptocurrency projects both new or old to distribute or allocate new tokens or coins to their users in the crypto community for free.
Crypto Airdrops are similar to receiving vouchers from a new shop to buy items for free or getting a free beverage from a restaurant for coming to the restaurant.
Another good example would be the gifts we get from attending someone's party or ceremony. Those thanks for coming gifts we get for attending the function invited or not.
Therefore, a crypto airdrop is related to users getting a small amount of a crypto project token for free. However, this is not necessarily true as users will have to put in time and effort or meet certain criteria to be eligible for these free tokens. It is more like a gift received for a job well done.
The time and effort could be being active in the community, creating an account in the project, promoting the project, following the project handles on social media, downloading their apps, sharing the news on social media platforms, connecting with other members of the project, and even maintaining a certain minimum balance or holding the token.
Like the example I gave earlier about the voucher before you can cash your voucher, you would have to visit the store or the drink from the restaurant, the drink doesn't come to you at your dwelling place, you will have to make your way to the restaurant.
Give the different types of crypto airdrops |
|---|
According to the records, there are four main types of airdrops namely; Standard Airdrop, Bounty Airdrop, Exclusive Airdrop, and Holder Airdrop. However, there is an additional type of airdrop not considered as typical as the aforesaid which is the Hard Fork airdrop.
Standard Airdrop:
This type of airdrop involves the sending of small amounts of a token to wallet holders in return for a service, such as signing up or creating an account with the crypto project. It is considered the simplest form of airdrop, as participants are required to provide just their wallet address, email address, and basic information, in Know Your Customers (KYC) verification to receive the free tokens.
Bounty Airdrop:
In Bounty Airdrop, users are allocated tokens for promoting the crypto project on social media platforms. These promotion acts may include sharing posts about the project on social media, following the project's official accounts, user referrals, etc.
Exclusive Airdrop:
In an exclusive airdrop, users are appointed or elected by the project team to receive the free tokens. The selection criteria can be based on the reputation, influence, expertise, and contributions of the user. This type of airdrop usually serves as a means to entice strategic partners or influencers for the crypto project.
Holder Airdrop:
From the name, one can see that it's a type of airdrop where users who already hold a certain amount of tokens are gifted free tokens based on the amount and duration of the tokens they are holding.
Hard fork Airdrop:
A hard fork emerges when developers create a new version of an already existing blockchain by changing the protocol codes, thus new tokens too. This leads to the existence of the old version of the blockchain and its tokens under the existing protocol, while the new token operates under new protocols. In this way, when a hard fork happens already existing users get the new token peer to the old token they were holding.
Have STEEM tokens ever been claimed as a crypto airdrop?. |
|---|
To my knowledge, it is a Yes for me, even though, unlike our usual new crypto projects STEEM token had no pre-existing or pre-mined coin to start with, as stated in the STEEM Whitepaper.
 |
|---|
That is to say, the STEEM project ran on a 0 existing STEEM supply, instead adopting a Proof-of-Work (PoW) mechanism to reward users. Hence, there was nothing to give to people who showed interest in the likes of Standard or Bounty Airdrops.
However, as the STEEM project continued, it adopted a new consensus mechanism in the Proof-of-Stake (PoS) where STEEM holders get rewarded a share (approx. 15%) of the newly minted token shared among Steem Power holders, which can be related to the Holders Airdrop mechanism.
 |
|---|
And again, going by the definition of Airdrop, where I say "Users are rewarded for carrying out certain tasks" in the blockchain, I can say our Steem rewards are Airdrops. Why did I say so? I said so because we earn Steem rewards for being active in the Steemit community by posting and curating, hence earning rewards from the 75% of newly minted tokens that go to the reward pool.
Why do I consider these rewards as an airdrop? I consider these rewards as airdrop because we never bought them with our money, it was given to us for free based on our levels of engagement in the Steem community.
How to identify if a crypto airdrop is legit or a scam. How can we also find free crypto airdrops |
|---|
Before going into how we can determine whether a crypto airdrop is legit or a scam, do you mind if we get to know what legit and scam are? Well then,
Legit simply means being legal, genuine, true or conforming to rules, whereas Scam on the other hand stands for being deceitful, fake, fraud, con or a dishonest scheme to cause harm. With this said, the question here is how can we differentiate a true airdrop from a fake one.
In the current world, we live in, everything can be mirrored into dubious acts (Scam), airdrops not excluded. Hence, one needs to be careful to avoid airdrop scams and below are some red flags to look out for:
Uninvited offers:
Be cautious of airdrops that you did not seek out or sign up for, as malicious airdrops are often what scammers use to lure targets into providing personal data or sending crypto tokens. Hence, before you participate in any airdrop actively carry out your research about the airdrop and the crypto project before giving out personal data.
Requesting for private keys:
No crypto project airdrop will ask for your private keys, hence any airdrops that ask for your private keys are highly possible scams. The Private keys in demand are means to access and manage your cryptocurrency, hence, you should never share them with anyone.
If asked to Make Deposits:
If the by any chance, an airdrop mandates you to deposit some tokens to some wallet to qualify you for the airdrop, then, it is possibly a scam. Remember, airdrops are said to be free to encourage and promote their token.
Guarantee of Profits:
Any crypto airdrops that guarantee users a certain percentage of profits are likely scams. The crypto market as we know is very a volatile and unpredictable market, hence, no one can assure you profits or returns.
Lack of information:
This is another important red flag to look out for as if an airdrop project carries little or no information about the project on its social media handles, websites or Whitepaper, it's likely a scam. Legit crypto projects will have a clear and detailed roadmap of their goals and how they plan to achieve them.
To find free and legitimate airdrops, one has to research various crypto projects most especially the new ones.
There are various sources where you can carry out your research or use to find legit crypto airdrops. These sources include social media platforms and crypto-related news outlets.
In addition, one can also employ specialized websites that have crypto airdrop calendars such as CoinMarketCap, Airdrops.io, Airdropalert.com, and DappRadar, where you can get a marked-out schedule of ongoing and upcoming crypto airdrops.
 |  |
|---|---|
 |  |
How are crypto airdrops taxed? |
|---|
Seeing this particular question, I marvelled, and then I asked could this even be possible? However, in researching the topic at hand, I found out that although it may be worldwide, certain parts of the actual fixed tax to airdrop.
Countries such as the USA, the UK and Australia have placed an income tax on crypto airdrops, hence are being taxed as ordinary income tax as airdrops are considered a means of increasing one's wealth.
This was addressed by the Internal Revenue Service (IRS) in its 2019 guidance, which explains that airdrops are taxed as ordinary income, on the market value the tokens had when you received and took full control of them.
Have you ever claimed a crypto airdrop before? Which coin was that? If you haven't claimed an airdrop before then explain how one can claim a crypto airdrop
Yes, I have, and I still currently do. I have claimed the Core token airdrop and still currently doing so using my metamask wallet. However, before I could claim any airdrop I had to do certain things before I could claim the airdrop, which are;
- Signing up to the project
- Having a crypto wallet.
- Staking my core tokens.
- Following certain rules by the project.
Now all I do is follow the procedure below to claim my airdrop token of the mandated date.
Step 1: Login to my Metamask wallet and click on the browser button at the bottom row, which takes me to Coredao.org
 |  |
|---|---|
Step 2: Click on the menu button at the top right corner and select Airdrop.
 |  |
|---|---|
Step 3: Confirm my country of residence, then I get to claim my airdrop.
 |  |
|---|---|
In this case, I can't as my next airdrop claim is slated for the 27th of September.
Advantages and disadvantages of crypto airdrops |
|---|
It serves as a free means to publicise and advertise a new crypto project.
It serves as a means of rewarding users and people committed to the project with a stake in the project.
Crypto airdrops serve as a means of raising awareness of a project.
It can also encourage the use and adoption of a new project token
Airdrops may prove to be useless if the token does not attain liquidity in any exchange platform.
There is always a constant threat of airdrops not being legitimate projects.
Another is the concern of security threats as airdrop will need users to connect wallets to claim airdrop.
There is also the fear of airdrops being a "pump-and-dump" scheme for new projects.
CONCLUSION |
As much as Crypto airdrops are a great way to acquire free crypto tokens, it's also very important to ply caution and do your research before partaking in any crypto airdrop event. "Free things can purge you" is a popular saying in Nigeria, hence be wary of what you do.
I wish to invite @yakspeace, @ninapenda, @ruthjoe, @drhira and @suboohi
Thank You for your Time
NOTE: Always have a smile on your face, as you are never fully dressed without one.
Thank you so much friends for sharing your valuable inside about the topic and I am very happy with it that again you have shared a very detailed information about Crypto air drops that what are these and I agree with you that air drops are basically free tokens that are given or distributed to users by a particular cryptocurrency project and it is a great way to attract more and more users day by day towards a specific project
You have successfully shared some of the most basic and important types of Crypto air drops including bounty air drops exclusive drops standard air drops and many more as well as you know to only name them but also explain them in a detailed wave as well as you have shared screenshots properly to elaborate other questions also
I agree with everything that you mentioned and I have happy to read your insights about topic and I am sure that further more in your posts you also create quality content like this so I wish you good luck and success in this engagement challenge of season 12 week 1.Good luck to you
I wish I could show my appreciation for this wonderful contribution in a better way than words, I really do... But here I am, just to say thank you for your unwavering support.
Thanks for this nice reply to my comment and its really happy thing for me to visit your entry. I again wish you a lot of success
Upvoted! Thank you for supporting witness @jswit.
You've got a free upvote from witness fuli.
Peace & Love!
Impressive entry @sahmie! Your clear explanation Of cryptocurrency airdrops is really helpful . Youve broken it down nicely & your examples make it easy to grasp . Best of luck in the contest! 🚀
Greetings brother, thank you for always make out the time to check up on posts and always leaving a constructive and impactful comments.
Dear friend you have made and really awesome a post and the important thing which I like in your post is it is so much details and every question is explained so very dead I can easily understand each and everything and the most importantly you have mentioned all types of the air drops important thing to remember is that you have mentioned the method about how can can we see whether it's scamming or not. These methods are really important to know for scamming and even some of them are also don't know before this post so it's great to know I have also participated in this contest well do check my post as well
Hola amigo .
Que bueno que gracias a academias cómo estas podemos aprender como se maneja el mundo criptográfico para evadir estafas y poder aprovechar muchos de sus beneficios, como en este caso aprovechar los Airdrops pero cuando son legítimos y confiables .
Te deseo mucho porque has hecho una gran investigación.
Saludos y bendiciones
From day one my friend I really enjoyed your writing skills it is filled with lots of quality and clearification. Indeed you worth the high grade given to you 🎉.
Thanks for sharing wishing you success please engage on my entry
https://steemit.com/hive-108451/@starrchris/steemit-crypto-academy-contest-season
I am very pleased with your post, your post called my attention, because you detail everything in depth in a very understandable way.
I like the part where you explain where you can see the airdrops close to their release and how you have claimed tokens.
Good entry, I wish you success!
Como siempre has dado un contenido muy completo, se nota tu esfuerzo en la investigación. Es un tema interesante, desconocía que las ganancias del comercio de la criptomonedas estaban sujetas a impuestos, al declararlo propiedad en lugar de una moneda.
Gracias por compartir, saludos y éxitos.