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What are Airdrops? Everything you need to know

what are airdrops

We have all seen crates of food and essentials that are dropped through airplane to the people in need during wars or floods and that is known as an airdrop. Whereas, in the context of cryptocurrency there is a new meaning to it. Airdrops are the distribution of tokens to the wallet of certain users, by the companies for free of charge. It is free of cost and the most asked question is why would companies give away tokens away for free? To understand in-depth let’s look into what are airdrops, and how they benefit the companies.

During the first half of 2019 alone, as many as 583 token offering projects were launched. A majority of these projects offered airdrops during its token sale.

what are airdrops

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So why do token offerings give away crypto tokens for free? It’s a simple way to drive attention towards your token offering against the backdrop of hundreds of other token sales.

What are airdrops: Why companies conduct it

There are various reasons for companies to conduct airdrops such as:

· Creating awareness

The main reason for companies to conduct airdrop is to create awareness. The ICOs have received major funds in 2018 only because the funds were raised by various projects. Due to this handful of projects, the promising ICOs don’t get the attention that they deserve to get. So, to create awareness, the projects will give out a few of their tokens. This will make you gain a stake in the system. Any experienced investor would want to learn about it. The project and this will lead to creating awareness of the project.

· Users

The other reason would be to understand the users. When a company conducts airdrops and the users want to take part in it they would have to fill up a form. This form consists of user details like their email id and their social media links which help the companies understand about the users. A potential client which will enable them to make progressively marketing promoting towards their optimal group of audience.

· Fundraising

Once the airdrop starts, all the social media platforms are filled with the news of the token which gains all the attention that project. If the model of the project is good then investors will post about the project and research about what your token offers. This will lead to an increase in the value of the tokens.

· Loyalty

In this cryptocurrency industry loyalty something very rare. Most crypto users just want to make as much money as possible and then move on to the next big project. But some airdrops are constructed in such a way that the more tokens you hold the more you will revive in the next round of Airdrops. In a case where the user is loyal to one project and holds a large amount of that projects token in their wallet, then they can be rewarded with more tokens from the company.

· Token Distribution

A whale is someone who is really rich and buys a large number of tokens in an ICO and doesn’t let anyone else be a part of this ICO. And this hostile takeover is one of the worst things that can happen in an ICO. The whole concept of cryptocurrencies is to be decentralized. But if the majority of the token is taken over by a few people it doesn’t fulfill the concept of decentralization.

So how can companies make sure that their tokens are evenly distributed and completely decentralized/ Airdrops can help where clients are dropped tokens proportionate to their existing holdings. Airdrops are a really powerful strategy for accomplishing wide and even distribution. Every one of these companies and Dapps is based upon a parent blockchain, like EOS, Ethereum, etc. These blockchains are generally very well distributed. Organizations can exploit that distribution via airdropping their tokens to the holders of the parent blockchain token.

· Fork

A fork is a condition whereby the state of the blockchain diverges into chains where a part of the system has a different point of view on the history of transactions than a different part of the system. That is essentially what a fork is, it is a divergence in the point of view of the state of the blockchain.

Presently, there are two sorts of forks:

  • Soft Fork
  • Hard Fork

Soft Fork

A soft fork is a backward compatible technique for upgrading a blockchain. In simple words, a soft fork is a software update that is backward compatible with the past versions of the software. Soft forks don’t really require nodes on the network to update to maintain consensus since all blocks on the soft-forked blockchain pursue the old consensus rules as well as the new ones. However, blocks produced by nodes complying with the old set of consensus rules will disregard the new set of consensus rules, and accordingly, will probably be made stale by the mining majority. This is on the grounds that for a soft fork to work, a majority of miners need to recognize and enforce the new set of consensus rules.

Hard Fork

A hard fork is a permanent difference from the past version of a blockchain. Another set of consensus rule is brought into the network that isn’t compatible with the older network. At the end of the day, a hard fork can be thought of as a software upgrade that isn’t compatible with previous versions of the software. All network participants are required to move up to the most recent software update to keep verifying and validating new blocks of transactions. Under a hard fork, blocks that are confirmed by nodes that are not yet moved up to the most recent version of the protocol software will be invalid. Nodes running the previous version of the software should pursue the new set of consensus rules, all together for their blocks to be valid on the forked network.

What are Airdrops: How to take part in it?

Well, you can take part in an airdrop any time you want to. But first there are some things you need to get it going and those things are as follows:

· Cryptocurrency Wallet

· Base Tokens

· Information Access

Cryptocurrency Wallet

A cryptocurrency wallet is nothing but a digital wallet where you sore your currencies, transfer them and receive various cryptocurrencies. Like in a literal sense you don’t exactly have a wallet and you don’t store your money as a wallet does. But instead, you save these cryptocurrencies in the form of public and private keys which helps you transfer and receive money. Creating a cryptocurrency wallet is the first thing you need to do because you will need a place to keep all your tokens. There are various types of wallets that will store your cryptocurrencies such as Trezon, Ledger Nano S, MyEtherWallet, Exodus, etc.

Base Token

Ethereum and bitcoins are known as base tokens. And they are known as base tokens because a major part of the projects that are built in this crypto space is built on top of or are forked off from those three. So, to take part in airdrop you need to have these tokens. If you have these tokens then you can right now take part in any airdrop that takes place. The airdrop tokens can be acquired in proportion to the number of base tokes that you have.

Information

Once you have your wallet and base tokens, the next thing that you need to do is extract information about when and where these airdrops are taking place. Back then, the only way you could get to know about the airdrop information is by keeping in track of forums like Bitcoin Talk. But now the process is much simpler and direct. There are various sites which are just meant for airdrops and there are various social media channels that give exact information and reports on the various airdrops. To get started, do the following:

· Follow the required relevant Twitter accounts

· Join Telegram groups that are relevant

· Follow online airdrop forums

· Make use of online services that will give information and notify of the upcoming airdrops.

What are Airdrops and what are the types of Airdrops?

There are various types of airdrops and each of these airdrops requires different sets of actions to unlock. The different types are:

· Standard Airdrop

· Bounty Airdrop

· Holder Airdrop

· Hardfork Airdrop

· Exclusive Airdrop

Standard Airdrop: These airdrops expect you to sign up a bulletin or various updates. You register with your name and email ID and get qualified for the airdrop.

Bounty Airdrop:For this airdrop, you have to play out an activity to meet all requirements for the airdrop. Most normal action incorporates tweeting about the project. You will get rewarded for your activities.

Holder Airdrop:This sort of airdrop happens when you hold certain particular tokens in your wallet. In this way, an EOS-based crypto will airdrop some free tokens to you, if you are holding EOS tokens in your wallet.

Hardfork Airdrop:When a coin hardforks from its original protocol, the holders of the original coin are equipped for the new coin’s airdrop also. The Bitcoin Cash airdrop on Bitcoin holders is an ideal model.

Exclusive Airdrop:If you are a loyal/VIP individual from a specific project, site, club and so on. You may meet all the requirements for exclusive airdrops which every other person may not be conscious of. As the name recommends, this airdrop is held only for a particular network.

What are Airdrops: How to not get scammed?

With the thought of free money, there are a lot of investors who will sign up for airdrops. Due to this reason there, many scammers out there who are looking to make some money from these investors. The various types of airdrop scams are:

· Dump Airdrops

· Private Key Scams

· Information Trolling

· Bait and Switch

Dump Airdrops:These airdrops are all about pump and dumps. They generally create a short-term hype for a project through social media posts. Once the interest grows the token value goes up. Once these tokens are available for exchange the creators of this project quickly sell or dumps all these tokens at a good profit. As soon they complete this process the developers disappear and the project dies. So how can you prevent yourself from dump airdrops?

· First take a look at the project’s website and the team members of the project. Check out the team members experience and past projects they were involved in.

· Read the whitepaper of that project and analyze what value does the project bring to the society.

· Finally, asses if the project needs a token for its project or not.

Scams of Private Key:The first thing that you need to keep in mind about the private key is that you never share them with anyone. The private is just like your ATM pin which you don’t give away to random strangers. What some scammers do is that they ask for your private keys in the form that you have to fill to take part in the airdrop. When you see that they are asking for then you can be sure that they are a scam. They do need your public address to send token but they have no kind of business with your private key.

Information Trolling:Since most of the airdrops get access to a portion of your data like email id, telegram handle, twitter handle and so on., they can amass this information and offer it to different advertisers to spam you with marketing content. On the off chance that is insufficient, they may go above and beyond and attempt to phish you. Be cautious about these phishing endeavors. In no way, you give them your email password or any delicate private information. To maintain a strategic distance from data trolling you have to, indeed, do your research. You have to check whether the project has any authenticity or not.

Bait and Switch:At last, we have something many refer to as a trap and switch airdrops. The thought is to fool you into signing for other partner airdrops, while you are signing up for one. This is done as such that the scammer can discreetly pocket some referral credit. They may even get you to join the pump and dump telegram or discord groups. While these don’t cost any cash, they sure are irritating and misuse of your time and mind space. At whatever point an airdrop approaches you to pursue another airdrop or to join any social media group, keep away from them.

Thus, this is what are airdrops and they are an amazing tool that helps companies boost up their projects and for users to pocket a penny in the process. Hope this article helps you understand what are airdrops and also never forget to do your research before signing up for any airdrops.

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