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The blockchain space is an interesting one. Despite its volatility, airdrops are an activity crypto enthusiasts participate in to win free tokens and get substantial returns. There are many free tokens and coins to be won from just holding base tokens in your wallets. Base tokens are coins like Bitcoin and Ethereum.

The most common way to get these free coins or bounties is by airdrops. This article will discuss what airdrops are, how it works, and how to secure your wallets.

What is an Airdrop?

An airdrop is a free coin a crypto company distributes to its community members. It is usually unsolicited and is deposited in the digital wallets of users who interact with the platform regularly.

Crypto companies use airdrops to reward active and existing coin users. They also use it as a marketing strategy for new projects.

It is important to understand what airdrops are, how to identify legitimate airdrops, and common mistakes to avoid during airdrops.

Fun fact: Did you know that the first airdrop happened in 2014? The Aurora coin (AUR) was projected to be the official cryptocurrency coin for Iceland and was awarded to every Icelandic citizen who submitted their national ID. A sum of 31.8 AUR was awarded to everyone who participated.

Types of Airdrops

There are different types of airdrops, and they are classified according to their requirements. They are:

Standard airdrop
Bounty airdrop
Holder airdrop

Standard Airdrops

Standard airdrops give out coins for free. The only requirements needed are a crypto wallet and a wallet address. This is the most popular type because of the ease and lack of restrictions.

Bounty Airdrops

Bounty airdrops are slightly different from standard airdrops. Here, participants are required to complete some tasks before the coins are given to them. These tasks are not difficult and are often beneficial for the company’s growth and publicity. These tasks may include social media engagement (often on Discord and Twitter), newsletter subscriptions, and signing up for new projects or referral programs.

Holders’ Airdrops

Holders’ airdrop, as the name rightly suggests, are given to users who have a required amount of other cryptocurrency coins in their wallets. These coins may be base tokens or popular coins such as Ethereum and Bitcoin. At a designated time and date chosen by the company, snapshots of wallets that meet up to the requirements of these airdrops are taken. After that, the free coins are given to the awardees.

Retroactive Airdrops

Retroactive airdrops are airdrop projects that reward committed users of that coin. It is awarded by monitoring the blockchain at several stages and taking snapshots of active accounts. The coin rewards are disbursed after, at a designated time and date decided by the crypto owners.

Why do Airdrops Occur?

You might wonder, why crypto companies give out coins for free. There are a lot of reasons backing this rationale.

When several users hold a particular coin, its market value increases. People hold a coin in their wallets because they are assured of its monetary and market value.
Airdrops are done to reward early and active participants in a project. The developers of a coin can give airdrops to reward faithful users.
Sometimes, airdrops require some tasks to be completed by participants. These tasks garner users for the crypto companies and their coins, thereby making them more popular in the crypto market.

How Airdrops Work and How to Participate in Them

Although airdrops are free, there are certain requirements needed before coins can be awarded to users.

The first step is to own a crypto wallet, a private wallet preferably. There are several types of wallets. If you have worries and concerns about the type of wallet to use, kindly refer to this article for guidance.

It is important to note that the wallet has to be compatible with the coins to be given out during the airdrop. For example, you cannot claim Ethereum coins from an airdrop using a Solana-based wallet, and vice versa.

The next step is to scour reliable crypto and airdrop sites for information on upcoming and current airdrop projects. Coinmarketgap, CoinGecko, and airdrop.io are popular websites used to check for upcoming airdrop projects.

Go on to pick an airdrop project, confirm its legitimacy and security, then go on to apply by fulfilling the requirements stated by them.

By doing so, you are eligible for the company’s airdrops. If you have crypto wallets that contain some coins, it automatically qualifies you for the airdrops. When the free coins are distributed, awardees would receive theirs in the linked wallets.

Common Mistakes that Occur During Airdrops

Airdrops, as interesting and rewarding as it sounds, have some issues that may arise during the farming season. It is important to keep your wallets and assets safe during this period.

Do not open several accounts to farm for airdrops. This might be a tempting and mouth-watering venture, considering the potential rewards, but do well to steer clear of it.
Be wary of airdrops that have low market value. Most of them eventually become worth less than their initial market value. They can also ruin your assets and identity.
Scammers and hackers can take advantage of crypto investors’ wallets that are new to the market. Make out time to conduct research about crypto companies, their coins and their authenticity.
Developers can utilize these airdrops to take funds our of your wallets without consent, lead you on to situations that end in phishing activities, and eventual loss of coins, tokens and assets from your wallets.

Conclusion

Airdrops are a means for projects to attract new users and generate interest in their platforms by distributing free tokens. They also serve as a path to decentralized distribution, creating wider participation and encouraging users.

Well-executed airdrops can generate positive sentiment about a project, and enhance its visibility and reputation.