At the mention of an airdrop, two things will quickly come to the mind. One is the use of military aircraft to deliver emergency supplies to troops or humanitarian crisis areas by dropping crates filled with supplies. Or one’s mind might alternatively jump to the Airdrop feature that Apple provides on its Mac and Mobile devices like iPhones, iPads, or the newer iPods.
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But that’s far from what we are going to talk about in this piece. Our piece centers on the cryptocurrency industry and its own version of Airdrop. What is it? And what purpose it aims to achieve.
Definition
An Airdrop in the cryptocurrency industry can be simply defined as the dumping of pre-mined cryptocurrency by new startups for existing users of certain digital coins with the aim of spreading the word about the new startup within the cryptocurrency community. Airdrops are typically given to people with proven cryptocurrency holdings within a wallet, and the new startups usually give out the airdrops proportional to what the holder of the cryptocurrency currently has. For example, a new startup might give out 100 Units of its new currency to every user of Ethereum who can prove they own 10 Ethers.
Reasons for Airdrops
In a world which typically sees a cryptocurrency multiply in value several thousand percents over a very short period of time compared to the established stock markets, it would seem very odd why a startup might give away free money if it really think it has any value. Airdrops might seem odd to the untrained eye, but they have sound goals and reasons behind them, and objectives they aim to achieve.
Some of the reasons behind Airdrops are as follows:
- Spreading the Word
The cryptocurrency industry has over 1200 distinct coins each seeking to outdo the other in gaining traction and acceptance within the cryptocurrency community. With so much on offer, it is sometimes daunting to keep up with happenings and names of each currency or what it actually does for that matter. It is so easy to get drowned out in the crowd for existing cryptocurrencies not to talk of new ones that are not even known anywhere.
In order to get people talking about their new invention, a lot of fresh cryptocurrency startups are resorting to an old trick which gets the buzz going about their new product. Airdrops or free money is a way for the new startups to get the cryptocurrency community, talking, debating, and exploring the qualities of their new coin. The use of the word of mouth is often a great and effective way of giving a cryptocurrency an exposure rather than pursuing the conventional marketing strategy. A word of mouth from an influential figure in the crypto community about receiving a few Airdrops from a certain new startup will ignite the interest of others that follow them closely and get the word spreading round.
Getting Ahead of Competition
The year 2017 is the year that saw the true proliferation of the cryptocurrency industry in the form of ICOs. Initial Coin Offerings are the ways new crypto startups use in amassing funding from investors all over the world. There have been literally hundreds of ICOs this year raising tens of billions of dollars for the cryptocurrency industry. And while raising funding is great, actually making the new cryptocurrency gain acceptance in the industry is a nightmare that many startups fail at doing.
Airdrops in their nature are designed in order to allow the new crypto startup gain an edge against the competition it has to deal with. Often in this industry it’s not about who was here first, but who got the most acceptance. There are very old cryptocurrencies still in existence that have little or no value, while newer ones multiply dozens of times in value. In order to truly give them an edge in a highly competitive and saturated industry, Airdrops are deployed by these startups to give them a head start in what will be a brutal struggle for existence and supremacyInitiate a Community of Users
The only way a cryptocurrency is worth anything than a few codes on a computer is if it is able to get real people who are will to accept it as a means of payment for real and digital goods and services. Having a community of users is the only way a new cryptocurrency can ever survive, and this has been a constant struggle that many haven’t really been able to figure out.
New cryptocurrencies usually start at values that are close to nothing, and this is usually because they have a zero user base. And for these new currencies to have any meaning, they need to have an established network of people willing to send and receive it, which will then attract the attention of the rest of the industry in the form of exchanges that will now be willing to trade in it against other cryptocurrencies. Airdrops are a strategic attempt by the new startups to get their products in circulation and give them the stamp of legitimacy they need to be addressed as proper cryptocurrencies. By offering free coins which most of the receiving users will like to see move in order to also benefit, the startups have an automatic entry into the industry that they hope will yield results within a short period of time
Airdrops are an innovative, cost effective way of generating a buzz around a new crypto venture. It is highly effective and hits home better than using conventional advertising which is often dismissed by their target audience as a result of the less than perfect reputations of some startups. Airdrops new startups get entry into the mainstream community using an effective backdoor that if properly worked will see its value rise in exponential proportions.