Playing in the Crypto ICO field? Read on…
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, 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 free lunch! To understand the danger of the increasing number of airdrops, we need to know the different types of airdrops. Crypto airdrops can be divided into three types:
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. 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’) and you will be dropped the new free coins. For example: Next and Ardor.
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.
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 the 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 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 the airdrops, you now understand why it is very important to do them in a safe and secure way.
Safety rules for participating in airdrops
I have been participating in airdrops for some time. I 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 — another red flag.
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!
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.
So here are the 7 tips I have collected from participating in airdrops over the past couple of months:
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 the everything in the crypto world, but it is good to mention it again. This is the most important rule. Never give your actual, real wallet to just anybody, right?
3. Create a new dedicated email address
I’d advise you to create a new email address that you only use for airdrops. It’s even better if you use different emails for each airdrop registration. This is possible if you have your own domain name, and you can create an email alias for every account. For example “firstname.lastname@example.org”. You won’t actually create an email, you will just forward all email coming into your one domain to an actual email address. But just creating a new email that you only use for the airdrops is the best and easiest option.
4. 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.
5. Never use the same passwords for the different websites
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.
6. Avoid KYC airdrops if you are even a bit suspicious
KYC stands for Know Your Customer. In most cases, to participate in an ICO you will need to provide your personal data (or, to do a KYC process). But, personally if I ‘m not going to participate in the actual ICO I avoid those types of airdrops. The risk is too big, and I’m really not comfortable sharing my personal information with that kind of projects.
7. Create a new Ethereum address
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.
How to find valuable airdrops?
Many Twitter profiles are tweeting about new airdrops or Telegram channels. Personally, I’m using this website to get updated about crypto airdrops. The list is large, sortable and updated every day.
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.
Even if there are a lot of scams in airdrops, and many are worthless, there are still some 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.
Originally published at cryptopotato.com on April 15, 2018.