Airdrops are coming, and they are coming in high numbers. No one can deny that they are currently the most popular trend in crypto communities. Equally, we are sure that many of you don’t know exactly what this phenomenon is, and whether it is any good for the cryptocurrency industry.
What is an airdrop?
Airdrops are free coins or tokens, as simple as that. But a normal, reflex question will be ‘why would someone give tokens or coins for free?’ The answer is very easy — it’s for marketing purposes; it’s a great way to promote a new crypto project, and to increase its awareness on social networks. The free coins get the airdrop-hunters to get out of their holes and join the project’s community. As you all probably know, a large, strong community is a must-have for successful projects.
Are airdrops really free coins? What’s the catch here?
There is no such thing as a free lunch! There is also a downside in the increasing number of airdropsTo understand, we need to know the different types of airdrops. Crypto airdrops can globally be divided into 3 types:
a. Holder airdrops
In most cases, airdrop projects are built on one of the bigger blockchains like Ethereum (more than 90% of all airdrops are built on Ethereum), and the rest are mostly on Stellar, NEXT or NEO (this is a snapshot and subject to change). To apply for this type of airdrop, all you need to do is to hold the air-drop-related crypto at a specific time (which is called a ‘snapshot of your wallet’) and you will be dropped the new free coins. For example: Next and Ardor. This is mostly done to thank the holders for their loyalty.
b. Forked airdrops
At some point in time, a blockchain may fork. When it does it splits into two separate chains. To apply for this kind of airdrop all you have to do is to hold the coins of the original chain, before the split, and you will be dropped with the new forked ones. The most famous fork was Bitcoin Cash on August 2017. There have been several Bitcoin-forked airdrops. Some of them with huge gains for holders of the original coin.
c. Bounty airdrops
These types of airdrops are most common today. We are now experiencing a real hype with these kinds of airdrops. In most cases you will need to do some social tasks like following the project’s Twitter, join its Telegram group and/or like the Facebook page of the project. Usually you also need to submit your personal details, like an email address, and of course — your wallet address, often an Ethereum based ERC-20 address for receiving the coins. You will rarely be asked to do a KYC process, but we will discuss that in detail later.
The dangers of airdrops
Scammers are everywhere, and it is no wonder that they are also exploiting this area too. You may be thinking ‘But hey, how can they scam me if something is “free”?’ Unfortunately, there is the catch, because nothing is completely free. You need to spend some of your time applying for an airdrop. There’s always the possibility that the airdrop was a scam or there is not enough audience for a project to become successful and you won’t see any coins, and you’ve wasted your time. However, the real issue is that scammers can collect the personal information that you provide during your application for the airdrop and they can sell it or use it again in the future.
If you are already participating in the vast numbers of airdrops, you now understand why it is very important to do them in a safe and secure way.
We have been participating in airdrops for some time. We can tell you now that majority of the airdrops are scams or completely worthless. Websites that hurt your eyes — or the same WordPress template for the dozens of the projects — are a red flag. Missing white papers, or displaying the same faces on the team’s section — all red flags.
Are there success stories? Yes, many…
But there are some great projects, with real value and it is a shame not to participate in those airdrops. Previously, we’ve had great airdrops, like Stellar. They were giving you 1,000 coins if you registered on their website. In January 2018 that was worth around $850. That is a pretty good amount, don’t you think?
Another great example of a successful bounty airdrop is the Ontology (ONT) token which is built on NEO. To participate in this airdrop you only needed to subscribe to the Ontology newsletter and you were dropped with 1000 ONT. The airdrop was held during January 2018, and when writing these lines the price for one ONT has recently crossed $4! Can you imagine, $4,000 for subscribing to a newsletter.
Also, meet the airdrop of Polymath, an ERC-20 token built on Ethereum. They had an airdrop in December 2017. For signing up on the website, users were dropped with 250 POLY. In February 2018 that was worth $400. Yes, only for signing up.
More examples? Okay, a few more: Minereum (MNE). Every participant received approximately 32.000 MNE. In december 2017 the worth was: 0.52 $ * 32.000 MNE = $6.640 (in June 2017 even worth over $300.000)
Every participant in Decred (DCR) received approximately 258 DCR which worth in december 2017 was: 73.45 $ * 258 DCR = $18.95
And there is Accelerator (ACC). Each participant received up to 100 ACG. In december 2017 worth: 5.21 $ * 100 ACC = $521 $
There was also eGOLD (EGOLD). Participants received up to 20,000 EGOLD in december 2017 worth: 0.016 $ * 20.000 EGOLD = 320 $ (in november 2017 worth 1.500–2.000$).
Blue Protocol (BLUE). Airdrop participants received 1,000 BLUE. The worth of a BLUE-token by the end of December 2017 was over $2, which makes this airdrop worth over $2,000.
And there was RBEL and HYDRO, and many more!
So there are a lot of success stories, but compared to all airdrops out there there are only a few that become very successful. Sometimes you never receive your coins at all, sometimes a project extinguishes like a candle for various reasons before it even hits an exchange and sometimes people just launched a project for fun (some very unserious projects).
And sometimes, just sometimes a project becomes very successful, also for various reasons: great marketing, smart airdrop campaign, hugh community, well know ambassador onboard, a solution to a real problem, etc.
So what makes a great project?
You can spend articles about this subject as well. And self called experts use a variety of reasons to call something high potential, but what you should think of is: experience of the team, advisors on board, is there a MVP or beta-version of their product, do they really offer a solution for an existing problem, is there a huge community, how many tokens, the ethos in their social media channels, do they have a white paper, does all their content looks taken care of. And even then, there is still no guarantee…
So here are several tips we have collected from participating in airdrops over the past year:
1. Never pay for an airdrop
If the “blockchain project” is asking you to pay in order to participate in the airdrop, get away very quickly.
2. Never share your private key
This rule applies for everything in the crypto world, and we can’t repeat it often enough. This is the most important rule. You can share your public address, but never ever share your private key. You also never give your actual, real wallet to just anybody, right?
3. Always (DOUBLE-)check the URL you visit.
Sometimes a project asks you to login to MEW (MyEtherWallet) to confirm your ERC20 address so they can send you your tokens. This is almost 100% scam for sure. Never ever share your private key to a site you don’t fully trust. If you have any doubts… trust your doubts! Better safe than sorry is our motto. An example? Sure. The original site of MEW is: http://www.myetherwallet.com/. Not www.nnyetherwallet.com or www.myethervvallet.com or myethurwallet or www.login.myetherwallet, etc. etc. etc.
Another tip: bookmark the trusted websites you often visit in your browser and be careful with clicking links in emails and website (when they suggest it links to your wallet)!
4. Create a new dedicated email address
I’d advise you to create a new email address that you only use for airdrops. But just creating a new email that you only use for the airdrops is the best and easiest option. In Google it is very easy to create one or more extra email addresses.
5. Never give your private email
Never give your primary email address. There are simply too many scams out there, and I’m not comfortable sharing my name with projects that aren’t yet known and established.
6. Never use the same passwords for the different websites or projects. Always choose a new password
This rule applies for all your accounts, and especially for airdrops that require registration for their websites. Good practice is to use one of the password manager applications or an online password generator. Take care of the management of your passwords, because you will generate lots of passwords and you can’t remember them all. Download a password manager or store them somewhere safe.
7. Always be aware to share KYC (ID-documents)
KYC stands for Know Your Customer. In most cases, to participate in an ICOyou will need to provide your personal data (or, to do a KYC process). In more and more countries KYC is obliged to prevent the finance of terrorism and money laundering. We will see more and more regulation over the coming months and KYC will become common sense(for banks it’s already normal and at exchanges you also need KYC almost always). Often KYC-light is also needed to prevent people joining an airdrop several times (under a false name). If Airdrop Elves shares an airdrop were KYC is needed, we’ve always done KYC ourselves as well. We completed ourselves every airdrop we share.
8. Create a new Ethereum address, or create multiple
Since most of the projects are built on Ethereum good practice is to create a new Ethereum address that you only use for airdrops. Even if there is no massive danger in sharing your public address, I feel safer when all those projects do not know how much Ethereum I have. More than that, data collectors like to sell this high-valued info.
9 What else can I do to protect my assets?
Invest in a (we prefer a paid, not a free one) virusscanner. Google for MetaMask or BLUE protocol and use a hardware wallet (Bitbox, Ledger or Trezor). You can also install some extensions in your browser that prevent you from visiting proven untrusted websites, for example ‘etheraddresslookup’. It saved us several times.
How to find valuable airdrops?
Many Twitter profiles are tweeting about new airdrops or Telegram channels. Most of them are scams. There are a few trusted parties out there, but of course we hope you’ll try our service first. Here is an example of our daily newsletter and you can signup by sending your email address to this Telegram Channel.
What to do with dropped tokens?
OK, so you have applied for some airdrops and what now? Well, in most cases you need to wait for the ICO to end for the token distribution. Then, if you do not want to HODL the tokens, wait for them to be listed on some crypto exchange. But since the value of most airdrops is around $5–10 our advice would be to wait. Just wait till the next bull run. Wait for new all times high. Or wait even longer (2–3 years) if you really believe in the project. At the same time I realize that in some countries $10 is a lot of money. So always make your own decisions and do your own research, learn a lot and have some fun. We’re still at the beginning of all things that the blockchain has to offer us.
Conclusion
Even if there are a lot of scams in airdrops, and many are worthless, there are still many that are great and legit projects with worth airdrops. In the bearish market that we are currently experiencing it may not be worth too much (airdrops are usually worth around $5). However, if and when we get the next bull run they could turn into a respectable amount. And you never know what coin is the next Stellar. Or RBEL, or BLUE, or even the next Bitcoin…