What are Crypto Airdrops?
Crypto airdrops are new cryptocurrency coins or tokens sent to a wallet either as a promotional strategy or after a hard fork.
- Crypto airdrops for promotions: A startup that needs early adopters, airdrops tokens to users’ wallets to gain popularity. These airdrops are usually free but a few might ask to provide staking or collateral to a popular cryptocurrency.
- Crypto airdrops after a hard fork: When developers upgrade a blockchain significantly, it results in two paths — old and new blockchains. So, an airdrop offers users to claim a new cryptocurrency and switch to the upgraded version of the blockchain. For example, Bitcoin Cash (BCH) airdrops. Bitcoin Cash blockchain is a hard fork of Bitcoin blockchain that has faster transactions.
Are Crypto Airdrops Valuable?
Unfortunately, there’s no way to predict the future value of an airdropped cryptocurrency. But occasionally, an airdrop can be highly profitable. While some airdrops like those by Ripple (XRP), Uniswap (UNI), and SushiSwap (SUSHI) gained a lot of value, many others have failed.
In the case of airdrops after hard forks, the success of new cryptocurrencies depends on the market sentiment. For example, despite being a faster fork of Bitcoin, Bitcoin Cash has less liquidity and a significantly lower market cap. On the other hand, Ethereum Classic (ETC), the cryptocurrency of the original Ethereum blockchain, has less market cap than its hard fork Ethereum (ETH).
How to Get Crypto Airdrops?
Here are the basic steps involved to receive cryptocurrency airdrops:
- Since most promotional airdrops are ERC-20 tokens, you can sign up for a cryptocurrency wallet like MetaMask, Ledger, or MyEtherWallet that manages ERC-20 tokens. These wallets will provide a public address for you to receive cryptocurrencies.
- Look for airdrop opportunities. You can do this on Twitter, Telegram, and airdrop alert websites.
- Always learn about the project details to make sure it's worth your time.
- Complete the tasks listed by the project to become eligible for its airdrop. These may include things like following social media accounts, connecting your wallet, and even staking some tokens.
Risks of Crypto Airdrops
Crypto accounts especially on Reddit, Telegram, and Twitter are filled with exciting airdrop announcements. Most of them aren’t worth your time and some might steal your currencies and endanger your privacy. Beware of these crypto airdrop risks:
- Pump-and-dump Airdrops: Developers create hype around the tokens. Once users start believing it will rise, they start buying and raise the price. This creates an opportunity where developers quickly sell all their tokens and mint profit at the expense of early users. Some projects may also ask you to buy or stake tokens which makes them riskier
- Phishing Emails: Crypto airdrop scammers send enticing or urgent emails to steal your data, credentials, cryptocurrencies, and so on. Learn more about protecting yourself from phishing attacks.
- Private Key Scams: Never trust a project that asks for your private key. If the requirement is to check your wallet balance, the public address is enough.
- Referral Scams: Airdrop scammers can ask you to sign up for several other things that end up wasting your time and might result in more spam/scams.Dusting Attacks: It involves sending a small number of tokens to many wallets in an attempt to de-anonymize the addresses.
Tip: Creating separate wallet(s) and email address(es) for airdrops can reduce the risk.
Crypto Airdrops FAQ
- Are crypto airdrops taxable?
- Airdrops are taxable in the US according to the IRS. Every country has separate laws regarding cryptocurrency taxations.
- Why didn’t I receive airdrop tokens in my wallet?
- There could be several reasons. Here are a few things you can do: Check if you entered your wallet’s public address correctly; see if you completed all the tasks listed in the airdrop offer, and check your inbox for the official email. If you still cannot figure it out, contact the project team.
Related Terms
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