What Is an Airdrop of Cryptocurrency?
In a bitcoin airdrop, tokens or coins are given to wallet addresses as a marketing strategy. The active members of the blockchain community’s wallets get modest amounts of the new virtual currency free of charge or in return for a minor service, such as retweeting a message the company establishes the currency. Platincoin believes a crypto airdrop’s main goal is to raise a new token or currency’s exposure and use.
Understanding Airdrops of Cryptocurrency
A crypto airdrop is a promotional activity generally undertaken by blockchain-based entrepreneurs to assist bootstrap a virtual currency initiative. Its goal is to raise awareness of the cryptocurrency project and encourage more people to trade it when it lists as an initial coin offering on an exchange (ICO).
Typically, airdrops are advertised on the company’s website, social media platforms, and cryptocurrency forums. Based on the blockchain network or currencies stored in current wallets, Platincoin believes coins or tokens are distributed to certain wallets alone. A receiver may be required to possess a minimum number of the cryptocurrency in their wallet to qualify for the gift. Alternatively, users may need to do a specified job, such as posting about the currency on a social media platform, interacting with a certain member of the blockchain project, or writing a blog post.
Airdrops of Cryptocurrencies:
- Standard Airdrop
In a conventional crypto airdrop, parties interested in receiving an airdrop announce their desire to participate. Individuals are required to supply a valid wallet address, while certain airdrops need no extra information.
Standard airdrops often include a fixed number of tokens to distribute and a cap on the number of tokens a person may acquire. Some conventional airdrops are thus time-sensitive. Although these sorts of airdrops are popular owing to their ease of usage, a single user can generate many wallets to deplete the airdrop amount fast; thus, obtaining them may be more challenging.
- Bounty Airdrop
Bounty cryptocurrency airdrops occur when users complete certain objectives. These responsibilities frequently include promoting a project by posting on social media and tagging the firm or retweeting a recent tweet about the initiative. There may also be referral incentives or finder’s fees for those who recruit other users, subscribe to the project’s newsletter or join the business’s Discord channel.
In return for completing activities, users often get points according to the size of the reward airdrop they receive. Users may also be forced to accumulate a particular number of points before receiving their airdrop. For example, a user may qualify for an airdrop after accumulating 300 points, given that each item mentioned above is worth 100 points.
- Holder Airdrop
Automatic holder crypto airdrops occur depending on who has existing tokens and how many tokens they have. Because wallets and blockchain information are included in a publicly distributed ledger, all blockchain users have complete visibility into wallets and token distribution.
The disadvantage of holder airdrops is that token holders may not want an airdrop. In contrast, holder airdrops guarantee that only the biggest and most invested parties benefit. Some holder airdrops may only reward members with a minimum number of tokens; otherwise, they may prorate the prize amount.
- Exclusive Airdrop
Exclusive crypto airdrops are holder airdrops that include selecting certain individuals for the airdrop. The distinction is that they may be picked based on other factors, such as the time spent on a project, the amount of money spent on non-token activities, or the number of forum posts. An even more concentrated method of rewarding people closest to the project, an exclusive airdrop may distribute tokens to wallets with no tokens.
- Raffle Airdrop
Some forms mentioned above may be coupled with a raffle airdrop. Typically, a project will specify the number of airdrops it will provide and encourage participants to obtain lottery tickets. This ticket may be acquired by holding tokens, accumulating points, or showing interest. Ultimately, the number of persons interested in the airdrop often surpasses the quantity the corporation desires to provide. Consequently, a restricted number of wallets are picked randomly to receive the airdrop through a lottery.
Crypto Airdrop Method
For Platincoin, thecrypto airdrop procedure starts with the project or organization determining that an airdrop is necessary. This might be in reaction to market tactics, a network hard fork, or as an incentive for current investors. The first stage is determining how the airdrop will be executed and who will be eligible. Launching the public campaign is the next phase for wide, universal airdrops. This involves collecting information for interested parties; this is often confined to wallet addresses, but businesses may also collect e-mail addresses to expand their contact lists.
Other sorts of airdrops may depend on a snapshot, which captures an instance that determines who meets certain requirements. For instance, the project may take a snapshot to determine which addresses possessed at least 1,000 tokens as of December 31, 12:00 a.m. Any transactions that occur after the snapshot will not affect the outcomes of the airdrop; hence, coin or token values are typically volatile in reaction to the timing of snapshots. Once the list of airdrop receivers has been determined, the airdrop is often assisted using smart contracts. The corporation may opt to utilize its Treasury wallet to conduct the airdrop, and it often makes the transaction block public to illustrate the airdrop’s fairness. The transaction will demonstrate the airdrop leaving the company’s wallet and being distributed to recipients.
Airdrop recipients frequently receive coins or tokens without being required to accept them. Some users may need to add the token or coin’s address to their wallet to access the token’s wallet balance. According to Platincoin research, Forbes claims that the Internal Revenue Service (IRS) has yet to directly address airdrops distributed to a project’s early adopters. Given that the receiver is unaware of the airdrop before receiving it, it is plausible to assume that such airdrops are considered unsolicited property for tax reasons.