Crypto Glossary

Airdrop

In cryptocurrency, an airdrop is essentially a “free money handout”. It is an event where free coins are handed out to the crypto community in order to help start market activity for that coin.

In essence, an airdrop is a marketing event. Typically, it is a way to launch a new coin or a new tokenized project into the marketplace. It is a way to raise awareness of the project. It works in a similar fashion as, say, handing out free samples of food in your local club warehouse or grocery store. It makes people aware and, if they want more, they can go buy more of that item. In crypto, the hope is they will become aware of the new project and help spread the word. Also, the free tokens can help spur some trading activity of the token and get things moving.

Airdrops can come in a variety of different forms. For instance:

  • Hard forks. For instance, when Bitcoin Cash was forked off of Bitcoin, it began with an airdrop that delivered an equal amount of BCH tokens equivalent to how much BTC you owned in the wallet. If you owned 0.25 BTC, you got 0.25 BCH for free as an airdrop.
  • ICO (or Initial Coin Offerings)
  • Freebies (just handing out free coins as a giveaway)

Some Airdrops are just automatic. For instance, some new ERC-20 tokens will be airdropped to anybody with an Ethereum wallet address. I’ve seen new coins show up in my ETH wallet that I didn’t even recognize. I never bought them. They were just airdropped to me and they showed up.

Some Airdrops end up working out very nicely as the project actually takes off and the market value of the coins increase. In many cases, though, the coins end up fizzling to nothing. While I have been airdropped many different coins since I got into crypto, the market value of most of it is basically…. dust. It isn’t worth anything and I just don’t care.

But, it can be worth it to keep a casual eye on upcoming airdrop events. Some are more legit than others. And, if the new coin has real use case and actually takes off, that “free money” can actually be worth something some day.

As of now, there is no official set of standards for how to execute an Airdrop. In time, I’m sure there will be some regulation that governs how this works.

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