There has been rather a lot of conversation around the topic of airdrop cryptocurrency coins recently, yet the same questions keep on propping up time and time again…
What is an airdrop?
Is there something that I need to be doing to be included in the airdrop?
When will Arbitrade do their airdrop? What’s going on?
What does an airdrop mean to me? How will I benefit exactly?
Huh? How does an airdrop work again??
…you get the gist!
Therefore, I have decided to write a short, easy-to-understand guide to help share all you need to really know about the airdrop cryptocurrency process, so that you can be confident that you thoroughly understand it in time for Arbitrade’s airdrop.
What Is An Airdrop Cryptocurrency Process?
Essentially an airdrop is simply a process that provides you with FREE cryptocurrency coins or tokens directly to your wallet.
In order to take part in a blockchain project’s airdrop, you may need to hold their coins in your private wallet, offline. However, this is not always the case, follow the development team’s instruction. The blockchain project will then award existing holders of their tokens, by distributing the additional free tokens into their wallet. It is important to understand that the new tokens that you will receive will be different from the original tokens.
If you do not currently own a cryptocurrency wallet check out this guide showing you step-by-step how to store your cryptocurrency offline. You can also checkout the recommended hardware wallets on the tools page.
There are generally two motivators behind the crypto airdrop processes that take place in the current cryptocurrency market. Let’s delve a little deeper into both.
- Hardfork
This is when, at a certain block number, a chain splits into two separate chains. If both chains get miner and community support, then two different coins are created.
For example, some of you may remember when Bitcoin did a hard fork and Bitcoin Cash was the secondary coin that came about after. Another example is Ethereum Classic, which was created from a hard fork of Ethereum.
Essentially developers, miners and the community decide which side of the tracks they want to be on.
- Marketing campaign
In order to spread publicity about a certain product, coin or exchange in the world of cryptocurrencies, blockchain projects will use an airdrop as a good marketing strategy. Many blockchain projects that offer airdrops are pre-ICO or have just finished their ICO.
It is a successful marketing strategy for the following reasons:
An airdrop creates awareness about an ICO or token; it brings people to the project who may not have otherwise known or heard about it before.
It helps the new coin or token stand out from the thousands of others on CoinMarketCap. Generally, when you know you own a coin, you can’t help but notice it on the list or mentioned in an article, because the seed has been planted and the name will stick with you.
The endowment effect is likely to occur whereby people value a coin or token they own higher than a token they don’t own. This bias can contribute towards price appreciation.
A good tactic to pump a coins value because projects will announce airdrops where coin holders will receive bonus coins proportional to the amount of total coins they hold. Therefore coin investors will have to buy more of the projects coins, if they want to receive a larger quantity of free coins.
Recently, it has become a more popular method due to various social networks, most notably Facebook, refusing to display adverts which promote cryptocurrencies. It’s main purpose should be add additional value to the existing community.
Airdrop marketing campaign announcements
The marketing campaign normally works by the project announcing a certain date and time that they will take a ”snapshot” of the blockchain. You will therefore have to make sure you are holding the project’s tokens off the exchange in your private wallet. Anyone holding their token at that point in time will receive a certain number of free tokens into their wallet.
However, certain projects also nowadays require more from you, usually to benefit their marketing efforts and to help get the word out. So far the only examples of extra requirements I have heard about include:
Having a certain number of Twitter followers and then having to ‘re-tweet’ a specific tweet
Being a member of a particular Telegram group
Airdrop marketing campaign non-announcements
What’s more, some projects don’t even announce their airdrops, and tokens may sometimes just magically appear in your wallet. This creates curiosity and excitement for the holders who are likely to tell friends or research what the token is, hence creating free word-of-mouth advertising for the blockchain project.
What Use is This Free Token To Me?
The main benefit to you, as a new token holder, is that these free tokens have the potential of increasing in value in the future, at which point you can either decide to sell for profit, or continue to HODL – aka. hold on for dear life! 😉
They are basically giving you an additional free investment, as a thank you for investing in their project. This additional investment could end up increasing in value by rather a lot. You only have to look at Bitcoin Cash as an example of an airdrop token, which was distributed after the Bitcoin hard fork. At the time of writing it is in fourth place on CoinMarketCap. This is pretty amazing in my opinion!
Many blockchain projects that are now the top 40 coins, completed airdrops in their early stages. For example, you will most likely have heard of the recent airdrop executed by EOS.
All You Need To Know About Arbitrade’s Airdrop
Arbitrade has announced in an earlier email to subscribers that they will receive a 1:1 bonus airdrop token for every Dignity (DIG) token they hold in a wallet.
You must hold your Dignity (DIG) tokens off the exchange and in one of the following wallets:
MyEtherWallet (MEW)
Trezor Hard Wallet
Ledger Hard Wallet
They will release more details in the future about the exact date that the snapshot will be taken, so that you have time to purchase your Dignity (DIG) tokens and move them into a secure wallet.
Note: The Contract Swap will happen first and will execute automatically. No action of you is required of you for this process.
In the email, they stated:
“The more DIG you have, the more BONUS token you will receive as long as they’re moved out of the exchanges into a good third-party wallet” – Arbitrade and Cryptobontix
The bonus token sounds like it will be a longterm hold investment, which can potentially increase in value over the next couple of years. In the update they stated:
“We are unsure of the price the bonus token will have in the beginning, but this was structured for a long-term receive and hold type token. This will grow in value over time due to the backing of cryptocurrency mining that daily proceeds are used to build the value of the token. It will really start to see value in a year or two.” – Arbitrade and Cryptobontix
For those of you who did not read the email update and are still waiting in anticipation, the latest information that was received from Arbitrade and Cryptobontix outlined the following points:
“We will provide an adequate window of time for token holders to move their DIG off of the exchanges before the snapshot.
We will also be providing some guidance to assist with making the process go smoothly and to avoid costly mistakes.
If you’ve already moved your DIG off an exchange, you’re fine and should leave your tokens where they are until after the snapshot and airdrop.
Everyone else should wait for the swaps to occur and the guidance to be published.
As stated above, we will be updating the Arbitrade & DIG community as things progress and instructions/guidance will be made available at the appropriate times.”
Final Words
I hope this article has cleared up everything you were wondering about the airdrop process. If you have any further questions, please don’t hesitate to get in touch. We are always here to answer any questions and provide information to you.
Finally, it would be negligent of me to finish this article without warning you of scams. So before you get too excited looking for projects who are offering airdrops, please be cautious of the following.
Never give or send your private keys to anyone. Keep them safe and encrypted!
Don’t send any money to any addresses. Airdrops are free! You just need to hold a certain coin or token in your wallet. ‘YOUR’ being the key word here, not anybody elses!
Do your due diligence and make sure you feel confident with the project who are offering an airdrop.