An “airdrop” allows virtual currency makers to give their coins to cryptocurrency owners for free – a move developers are doing as a marketing tool as well as to encourage mass adoption of their cryptocurrencies. Essentially, an airdrop is where a newly launched digital currency is given away to existing holders of digital coins, such as ethereum or bitcoin, at no cost. Giving away airdrops is not a novel idea. Back in 2017, airdrops have been popular due to the regulatory un-surety faced by issuers of digital tokens.
According to Matthew Roszak, co-founder of blockchain-tech company Bloq and Chamber of Digital Commerce Chairman, airdrops are akin to “getting free lottery tickets.” He added that utilizing airdrops is a cost-efficient way for virtual coin developers to promote their projects without having to spend on “billboards and T-shirts”. He also sees “a tsunami of airdrops” to be released this year alone.
Airdrops can be likened to the freemium model where users are provided with free access to the product’s early version in order to generate demand for the token. It is similar to a voucher given to customers in order to try a product, or in this case, a platform. Similar to regular cryptocurrencies, airdrops are also another way for scammers to dupe unwitting victims. There were cases of scammers touting an airdrop for non-existing projects. Other cases saw new tokens having a so-called airdrop but were actually scams with no intention of creating an authentic token – all it did was require its potential victims to give away their cryptocurrency or send in their private keys in order to be part of the airdrop when actually, victims will only be losing their funds.
However, Blockchain Capital’s Spencer Bogart believe that airdrops are “an increasingly sophisticated approach to customer acquisition.” He explained, “Slipping money into someone’s pocket is a powerful way to get their attention.” He sees the potential of airdrops to encourage mass adoption better than ICOs ever could.