Most articles on cryptocurrency airdrops can be boiled down to three points:
- A cryptocurrency airdrop is when cryptocurrency coins/tokens are given away for free.
- Airdrops are done by ICOs that want to become popular.
- You can find cryptocurrency airdrops by googling “cryptocurrency airdrops.”
But are coin airdrops the same as token airdrops?
Are all airdrops “free” in every sense of the word?
Are all airdrop listing sites equally useful?
The answer to each of these questions is a resounding “no.”
To understand why we need to look closely at the nature of cryptocurrency airdrops.
Blockchain-based startups can raise money in several different ways. Some startups sell shares of stock through an Initial Public Offering (IPO). During the IPO, investors are allowed to buy shares of a startup. Anyone who owns a share is entitled to some of the startup product’s dividends.
A more popular fundraising method is Initial Coin Offerings (ICO) and Token Generation Events (TGEs). Instead of selling shares, startups raise money by selling coins or tokens.
Cryptocurrency coins such as Bitcoin, Dogecoin, and Litecoin can only transfer value like any other currency. Exceptions like Ethereum and EOS can also build smart contracts and decentralized applications (dApps). A blockchain can only function if it has a particular cryptocurrency coin (see more under “Altcoins”).
Cryptocurrency tokens are different.
Tokens are built on top of cryptocurrency coins that run blockchains. The ethereum blockchain hosts over a thousand different types of tokens. When free tokens are distributed instead of free coins, the event is called a token launch. Token launches are also known as token generation events.
“ICO” is used to describe both initial coin offerings and token generation events. This mix-up occurs in part because of the belief that “coins” and “tokens” are the same thing.
It also occurs because no blog post about ICOs looked better by adding the words “and TGEs.”
As a prime example, you can check out our article which is NOT titled “45 Questions that Scare Scam ICOs and TGEs.”
Defining cryptocurrency airdrops as getting crypto “for free” has some problems.
A better definition of cryptocurrency airdrops is “the mass distribution of coins or tokens without charging consumers.”
This small change is needed thanks to active airdrops.
Active airdrops are free in the sense that you are not charged money. For an active airdrop, you get tokens in exchange for small acts of support such as Facebook “likes.”
Tapping a “retweet” button takes very, very little labor.
But it’s still labor.
If an active airdrop is completely “free,” then the acts of labor to get that airdrop must be free.
If you see no issue with labeling labor as free, then I formally invite you to clean my apartment.If active airdrops are free, come clean my apartment. Click To Tweet
In many cases the actions to claim an active airdrop are indistinguishable from bounties. However, active cryptocurrency airdrops do not always occur for the same reason as social media bounty programs. Bounty programs in the pre-ICO stage are geared mainly towards building hype and awareness.
Passive airdrops are free in every sense of the word. In many cases, you do not even have to pay attention to the ICO/TGE in order to receive tokens. ICOs and TGEs will simply send their tokens to your wallet if it meets the qualifications set out in the smart contract.
A smart contract is a computer protocol that determines how tokens will be distributed and how they will function. In the simplest case, a smart contract could be programmed to release tokens to any cryptocurrency wallet that already holds a certain amount of Ethereum. The token then sits in the wallet until the wallet’s owner discovers the tokens.
Many ICOs and TGEs give advance warning for passive airdrops. It starts when they state when the team will take a “snapshot” of a blockchain. Because blockchains are distributed ledgers, anyone can see who holds coins or tokens from that blockchain at any given time. The snapshot records the accounts of all of the wallet holders on that blockchain.
For instance, Callisto (CLO) took a snapshot of block 5500000 on the Ethereum Classic Network. This block was processed on March 5th, 2018. That means the team behind Callisto could identify every cryptocurrency wallet on the Ethereum Classic blockchain which already owned some ETC (Ethereum Classic).
The smart contract was coded so that for every 1 ETC in the wallet, 1 CLO token would be deposited.
In the case of Callisto, the passive airdrop targeted holders of a similar coin, ETC. Pre-ICO passive airdrops always target holders of a similar token rather than the same token. During and after an ICO, Callisto could reward CLO users by airdropping more CLO to them.
Passive airdrops aren’t always done by ICOs. Less than two weeks after Callisto’s snapshot, the cryptocurrency exchange Binance airdropped 6,250,000 ONT tokens to its users. The amount of ONT each user received depended on how much ONT users held in their accounts.
Holder airdrops occur when the only people allowed to participate are those who own a certain amount of cryptocurrency at the time of a pre-announced snapshot. Contrary to popular belief, holder airdrops are not always passive.
For example, the Archetypal Network Project is promoting a Holder airdrop between 1 October 2018 and 1 October 2019. However, passively owning ACTP tokens is not enough to qualify. ACTP owners also have to join a telegram group, follow on twitter, and fill in their social media handles and wallet address.
Unannounced Airdrops are also sometimes called “surprise airdrops.” These occur without notifying anyone of the snapshot date. The wallet user simply finds new tokens waiting in their wallet. By necessity, unannounced airdrops must also be passive.
Upcoming Airdrops refers to pre-announced airdrops that may be active or passive. Active airdrops must be pre-announced or else no one will know how to claim the tokens or coins. Passive airdrops may be unannounced or upcoming.
All the bitcoin transactions ever made are recorded on a distributed ledger available to everyone. Bitcoin’s protocols validate the history of the blockchain ledger.
Because blockchain ledgers are distributed, no one individual can decide how to update a blockchain.
However, blockchain was not the first attempt at a distributed ledger.
The difference is that the others failed.
Problems with Prior Attempts
1.If anyone can access and change a distributed ledger, then how do you stop cheaters from editing the ledger for their own benefit? If a centralized source has to look for cheaters, then it is no longer a decentralized, distributed ledger. Instead, an automatic protocol is needed.
2.If a cheater can change the ledger or protocol as easily as someone could change an excel document, then it is extremely easy to cheat. A solution is to make it harder to affect the ledger or protocol. This could be done by forcing cheaters to pay for the computing power to solve complex cryptographic puzzles. If the electricity and computing power needed to affect the ledger increases, then it becomes more expensive to cheat. If cheating becomes too expensive, then no one has a reason to cheat.
3. A distributed protocol could make it more expensive to cheat, but who is going to pay for the computing power needed to solve those cryptographic puzzles? It can’t be a single centralized source of funds. Detecting cheaters must be decentralized.
4. If detecting cheaters is decentralized, then the task of detecting cheaters must be split among everyone using the protocol. They must all reach a consensus in order to change the ledger. For bitcoin, consensus meant that 51% of users agreed on a change. But if a cheater uses a supercomputer to generate 51% of the protocol’s power, then the protocol will assume that the cheater’s instructions are the consensus of the majority of users. This is called a “51% attack.” The way to stop a 51% attack is to increase the number of non-cheaters. As more non-cheaters join, cheaters will need more computing power to accomplish the 51% attack.
5. Even if distributed ledger and protocol existed that could stop cheaters, non-cheaters would have no incentive to pay for the protocol’s electricity and computing power.
So, how do you convince non-cheaters to pay for the electricity needed to fight 51% attacks without using a centralized source?
Bitcoin as an Answer
In October 2008, Satoshi Nakamato published the answer:
If non-cheaters won’t give up their electricity for free, then the protocol should pay them.
However, a computer program can’t hand out cash. Even if it could, that cash ultimately is controlled by a centralized source: the government.
What was needed was a digital currency whose value was tied to the cryptography needed to process the distributed ledger. This became known as a “cryptocurrency.”
He named his cryptocurrency “bitcoin” and called this combination of a protocol and distributed ledger a “blockchain.” The people who donated electricity and computer power to the bitcoin blockchain became known as “miners.”
The bitcoin blockchain was far from perfect. Luckily, bitcoin’s protocols were open-source. That meant anyone could examine or upgrade the source code.
An individual can upgrade the Bitcoin source code, but that upgrade is a new blockchain. If the blockchain community (miners, traders, masternode holders) sticks with the old blockchain, then the new blockchain is nothing more than a file on some developer’s laptop. If everyone switches from the old blockchain to the new blockchain, then it is accurate to say that the old blockchain was upgraded into the new blockchain.
This split between the old and new blockchains is called a “fork.”
A cryptocurrency fork can be either soft or hard.
In a soft fork, the community of old blockchain users can use the new blockchain with equal ease. If the new blockchain is superior, then over time more community members will focus on the new blockchain over the old one. Once the entire community has moved onto the new blockchain, the old blockchain falls into disuse. The result is an “upgraded” blockchain.
In a hard fork, the new blockchain is so different that it cannot interact with the old blockchain. This means the new blockchain has become “backwards incompatible” with the old one. The blockchain community now must choose whether to put their resources into the old blockchain or the new blockchain.
If the new blockchain is incompatible with the old blockchain, then the old blockchain’s cryptocurrency no longer interacts with the new blockchain. The new blockchain needs its own alternative cryptocurrency. These alternative cryptocurrencies are called “Altcoins.”
If everyone simultaneously switches from the old blockchain to the new blockchain, then a hard fork appears to be an “upgrade” like the soft fork.
This never happens.
The blockchain community has invested time and money into the old blockchain and they must be convinced to divert resources to the new blockchain.
If the blockchain community splits up between the old and new blockchain during a hard fork, then two blockchains are now in use.
This happens when a hard fork results in a coin that has advantages over the original bitcoin.
In these cases, the new cryptocurrency powering the new blockchain is called an Altcoin (alternative coin). Most altcoins result from tweaking the source code of earlier blockchains until it constitutes a hard fork. Since bitcoin’s source code is already available, many altcoins can be traced to forks in the Bitcoin blockchain.
When a hard fork occurs, the altcoin’s distributed ledger changes as well. In some cases like Bitcoin Cash, the altcoin’s ledger begins in the same state that the old blockchain (Bitcoin) was in. In other cases like Litecoin, the altcoins ledger is entirely different.
Hard forks can change characteristics such as block size, transaction time, and how the coin is mined.
If a developer wishes to create an altcoin with a hard fork, the developer needs a way to encourage the blockchain community to switch from the old cryptocurrency to the altcoin. Even a superior altcoin will fail if the blockchain community never becomes aware of it.Superior altcoins fail without public awareness. Click To Tweet
Unlike passive airdrops described above, fork airdrops do not distribute free coins using a smart contract. Instead, altcoin developers take a snapshot of who holds coins from a particular block on the blockchain. The Bitcoin cash fork happened at Block 478558. That block was processed on August 1st, 2017. The Bitcoin Diamond fork was at Block 491407 which was processed on October 24th, 2017.
Bitcoin cash developers wanted to convert Bitcoin users into Bitcoin cash users. In order to speed up adoption, they airdropped Bitcoin cash to anyone who held bitcoins at the time of the fork.
A common misconception is that an airdrop claimer will receive tokens within a few hours of finishing the claiming tasks. The length of time between claiming an airdrop and receiving tokens depends on when the airdrop is held. Airdrops can occur before an ICO (pre-ICO airdrop), during an ICO (ICO airdrop), or after an ICO(Post-ICO airdrop).
When the ICO/TGE sale finishes, some investors who bought tokens or coins can sell or trade them at exchanges. However, airdrops are rarely released immediately after the token is listed on an exchange.
This time gap between claiming and airdrop and receiving an airdrop is called a “lock-up period.” These can take anywhere from weeks to months.
Once airdrops are released, some will be sold immediately on an exchange. These quick sells lower the value of the token. If there is no gap between when the token is first traded and when the airdrops are released, then the token will lose value as soon as it becomes available. This hurts anyone who bought tokens during the ICO.
However, nearly half of all ICOs with institutional backing do not have lock-up periods. There is also no lockup period for the investors and team itself. The lockup period for airdrops usually ends several weeks after the ICO sale ends.
Post-ICO airdrops do not need to have a lock-up period because the market has already been exposed to the new coin or token.
If an airdrop is successful, some blockchain companies will engage in “Round 2” or even “Round 3.”
In the early days of ICOs, it took work to find a cryptocurrency airdrop. You would have to be on the right forums or telegram channel at the right time to see an announcement.
Now, there are several ways to find airdrops. Each has its own pros and cons.
Bitcointalk.org is a cryptocurrency forum from the ancient times (a.k.a. 2009). It was started by Satoshi Nakamota, the person(s) who published the original bitcoin source code. No self-respecting ICO would prepare an airdrop without first announcing it on bitcointalk.
Times may have changed, but good techniques have not. If you want to see an airdrop before anyone else does, then niche forums are the way to go.
Comprehensive – If an ICO isn’t on bitcointalk, they probably have something to hide.
Time intensive – Forum posts become harder to find as new posts accumulate on top of them. Finding an airdrop involves wading through a lot of irrelevant topic threads.
There is a reason that active airdrops focus on retweets, shares, and likes. The goal of the ICO/TGE is to reach as many people as possible. If they did their job well, then finding them on Twitter or Facebook should be relatively easy.
When in doubt, hashtag #airdrops.When in doubt, #airdrops. Click To Tweet
Convenient – You can search for airdrops without leaving your favored mode of communication.
Consistent Supply- No matter what time of day or night, you can be sure an airdrop will be waiting at #airdrops.
Hard to find good airdrops – The most visible airdrops on social media are not necessarily the highest quality airdrops. A low-quality airdrop focusing on retweets will be more visible on Twitter than a high-quality airdrop that is spread between Twitter, Telegram, and Facebook.
No vetting process – Anyone can post on social media. A tweet is not enough to determine whether an ICO is a scam.
Another resource for finding airdrops are airdrop listing sites like AirdropAlert or 99Airdrops. Most rely on anonymous submissions and alerts.
Some sites like airdrops.io hold “exclusive airdrops” which are identical to regular airdrops except you also have to follow airdrops.io on Twitter and Facebook.
Filters – Good listing sites have filters that let you choose which airdrop tasks you are willing to do. For instance, if you do not want to share an ICO’s information on LinkedIn, you can filter out airdrops that require a LinkedIn task.
Comprehensive – ICO Listing sites will have the largest total number of airdrops. This is because they do not need the consent of ICOs or TGEs in order to add them to the list.
More Tasks per Airdrops – Aggregators provide no value to airdrop claimers besides informing them of the existence of airdrops. Some aggregators even add self-promoting tasks to airdrops that otherwise would not be needed.
Inconsistent Vetting Process – Many aggregators will accept any ICO submitted to them with the understanding that they are not liable if the ICO is a scam.
The newest option is to create a free account at an airdrop hosting platform like Block Tree Club. With an account, you can collect airdrops without having to re-type your name, email, social media handles, and ethereum wallet address every single time.
Blockchain startups monitor their airdrop views and claims from a business portal. Once you claim the airdrop, the platform sends your account information to the startup’s portal. They can then immediately export that information into Excel or other formats.
Because of the pre-filled account, airdrops held on hosting platforms will include fewer steps than airdrops on listing sites. However, this advantage disappears if the airdrop requires real-time verification such as through a telegram bot.
Skip Airdrop Tasks – Unlike the three prior sources, airdrops platforms make the actual claiming process easier. Instead of repeatedly typing out your ethereum wallet and social media handles, you can tap a button and send that information directly to the ICO/TGE.
Consistent Vetting – Unlike listing sites, airdrop hosting platforms must contact the ICOs/TGEs to ensure that their user’s account information was successfully transmitted.
Less Comprehensive – Listing sites can list ICOs they never come into contact with because the listing site does not contribute value to the airdrop process. Airdrops platforms need the proactive consent of an ICO before they can be listed.
Bonus Advantage Not Always Applicable – In some cases, having a pre-filled account will not add extra benefits. For example, airdrops using real-time verification will not allow users to finish tasks without re-typing some information. Similarly, airdrops that require users to create password-protected accounts will sometimes require repeating information.
The value of airdropped coins and tokens depends on how much people want them and what products or services people can access with them. Ordinarily, a startup would only sell products once they are made. Even an IPO involves an investment in something tangible: the profit dividends of a company. However, few ICOs have a working product by the time they want to start selling tokens. The worth of most tokens depends on a product that does not exist.
Even if the ICO manages to get all needed investments, how will they attract a consistent userbase? Institutional investors are more interested in dividends than actual blockchain products. And the inherent utility of a token can’t be demonstrated if no one uses it.
Most ICOs do not have a working product, so there is no equivalent of a “free trial” or even a “demo.” The only experience a potential user can have with the blockchain product is vague advertisements and articles on Medium.
Even if an ICO gains a few hundred token owners, how will those token owners exchange their tokens for other cryptocurrencies? The ability to buy and sell tokens at relatively stable prices depends on the token’s liquidity.
Liquidity refers to the ability to easily buy or sell a commodity without hugely impacting the price. For instance, if only five people use Mickey Mouse tokens and none of them want to buy more Mickey Mouse tokens, then it is impossible to sell a Mickey Mouse token unless the token is offered at a much lower price. No exchange or traders will want to hold or trade Mickey Mouse tokens because there are only five people who would ever buy or sell the token.
In order to be liquid, a coin or token must be distributed among a large number of people.
If an airdrop is passive, then avid cryptocurrency users will find their wallets filled with strange tokens. In order to figure out how valuable the tokens are, the user must visit the website and check out the product. Now, the user knows what the token does, and how valuable it can be.
If the token is interesting enough, the receiver of the airdrop may tell others about the token.
Instead of asking pitching tokens or products directly to cryptoasset owners, the startup can offer this “free sample” in the form of tokens.
While passive airdrops depend on curiosity and word of mouth, active airdrops take advantage of social media algorithms. By incentivizing users to retweet, share, and clap, blockchain startups boost the number of people they reach organically. This can be even more effective than traditional advertising since it appears to be a word-of-mouth recommendation.
Unlike other forms of advertising, airdrops are mostly paid for with the token that is being dispersed. This gives ICOs and TGEs the ability to market a product without having to go into debt or seek traditional financing.
Blockchain projects are built under the assumption that people will one day use them. In order to be successful, blockchain projects have to sell itself both a product and as a cryptocurrency token.
Yet of the thousands of decentralized applications (dApps) created with Ethereum and EOS smart contracts, only 8 of these dApps have over 300 daily users.
The goal of ICOs is for people to use their coins or tokens instead of fiat cash or bitcoin. For coins, that means switching over to an entirely new blockchain. Tokens must compete with every other airdropped token in the wallets of active claimers. These converts are called “early adopters.”
One solution is to create product-based in groups. The question’ “Are you an Apple Mac Guy or a PC Guy” has lead to numerous slapfights. Why? Because Apple created a community that self-identified with the product. “Apple Guys” will buy an apple product no matter what physical or social obstacles lies in their way.The question’ “Are you an Apple Mac Guy or a PC Guy” has lead to numerous slapfights. Click To Tweet
Airdrops take a less combative approach to building a communal userbase.
These airdrops go beyond follows/shares/retweets and asks users to contribute a post or ask relevant questions in the telegram group. These actions have little effect on organic reach, but they do give the ICO an opportunity to show potential users what their community would look like.
Like most advertising strategies, a common goal for airdrops is to collect leads for potential investors. Tasks that involve “registering” for a site or exchange aim to familiarize airdrop claimers with their product. Other ICOs will only allow users to claim airdrops once they have signed into the relevant site. These actions also help create community and raise awareness.
More aggressive airdrop programs will ask users to pass a “Know-Your-Customer” (KYC) Verification.
In order to invest in an ICO, bank, or mutual fund, you need to fill out what is called a KYC (Know Your Customer) form which may involve your photo ID, bank account, or social security number. The goal of the document is to prevent criminals and terrorists from using banks for illegal activities.
If an ICO’s airdrop asks users to pass a KYC, then it will take less work to turn that user into an investor. Without that airdrop task, the ICO must convince the airdrop claimer to pass a KYC for the sole reason of being able to invest.
Two processes exist for claiming an airdrop. Both start with the same steps.
Protection Through Education
If you do not know the difference between a public key and a private key, you will be scammed. You can think of a public key as though it were the address to a bank. It does not matter who knows where the bank is located. If no one knew where the bank was located, they couldn’t make a deposit.
The private key is the passcode that turns off the security cameras, knocks out the guards with sleeping gas, and opens every safety deposit box.
The only people who want your private key are bank robbers.
Another trick scammers use is to create fake websites in hopes that someone will accidentally enter their private key. This means that you should open your wallet as rarely as possible. To check the contents of your wallet, either download an extension like “meta-mask” or enter your public key on a site like Etherscan.com.
2. Create a Wallet
A cryptocurrency wallet is composed of a public key and a private key. Records of the wallet’s coin and token transactions are stored in the coin’s blockchain. This means you can print your private and public keys on a sheet of paper, and you will have created a paper wallet.
If you are concerned about someone in the real world getting your private key, then a hardware wallet is a better choice.
If you prefer the convenience of software, then you can download a desktop wallet or mobile wallet. However, if your computer is remotely accessed, then the private key can be taken.
If you value convenience over all, then a web wallet is best. These are held by cryptocurrency exchanges and other online providers. If hackers can access these online providers, then they will have your private key.
3. Activate the wallet – Most airdrops will not release tokens to a wallet that has never been used. Creating a crypto wallet is as easy as generating two strings of letters and numbers. That means it would be simple for a person to create dozens of wallet addresses. This makes it easy for scammers to claim extra airdrops.
In order to activate the wallet, some coins or tokens must be sent to it. The problem for cheaters is that all blockchain transactions are transparent. If a cheater uses one wallet to send coins to ten other wallets, the blockchain will show that transaction. The original address could be hidden by a coin mixer, but then the cheater has to pay to mix coins for every single wallet.
Step 4 differs depending on whether you use airdrop listing sites or hosting sites.
- Go to listing site.
- Find an airdrop that looks worthwhile.
- Go to the ICO’s form and enter
c. Twitter handle
d. Facebook handle
e. Telegram username
f. Ethereum wallet
- Verify email.
- .Follow social media tasks
- Periodically check Etherscan to see if the airdrop has been released.
- Periodically check telegram channel/newsletter to see which exchanges the airdrop can be sold on.
Every time you want to claim an airdrop from your favorite listing site, this process must be followed. That is not true for airdrop hosting platforms.
- Go to platform site.
- Tap an airdrop that looks worthwhile
- Follow social media tasks.
- Opt-in for Messenger alerts for token release and exchange listing.
Airdrops are a fun and (mostly) free way to enter the world of blockchain technology. When airdrops are first claimed, their value may be anywhere from 0.01 USD to 50 USD. If the project grows smoothly, the value of each token will rise. An airdrop that is valued at 1 USD today might be valued at 100 USD in a year.
So free airdrops are both a means to access blockchain projects and a means to invest in the future of that blockchain project. If neither of those options appeal, then an airdrop can also be exchanged for cash or bitcoin as soon as the lock-up period ends. All in all, it’s a win-win situation.
Just look out for bank robbers.