What is an encrypted airdrop? Detailed guide-

Encrypted airdrop Refer to a marketing gimmick. Here, coins or tokens are sent to the wallet address to facilitate the launch of new virtual currencies. A small amount of new virtual currency can be sent to the wallets of active blockchain community members for free. Or in exchange for a small service, such as forwarding posts sent by the publishing company.

What is a cryptocurrency airdrop?

An airdrop is a promotional activity conducted by a blockchain-based startup to help guide virtual currency projects.As ICO (ICO), which aims to increase people’s Cryptocurrency security Regarding cryptocurrency projects and allowing more people to trade.

usually, Encrypted airdrop Advertise on company websites and cryptocurrency forums.Coins or tokens are only sent to the current holder Crypto wallet, Such as Bitcoin or Ethereum.

The recipient may need to hold a minimum number of encrypted coins in their wallet to be eligible for the free gift. It may also be necessary to perform specific tasks, such as –

  • Post information about currencies on social media forums,
  • Connect with specific members of the blockchain project, or
  • Write a blog post.

legal Encrypted airdrop Don’t require capital investment in currency. They are essentially promotions. On the other hand, some crypto scams involve sending tiny amounts of bitcoin or other cryptocurrencies to unsuspecting recipients in so-called dust removal scams. It is always a good idea to pay close attention to unsolicited deposits in crypto wallets.Best learn from one Cryptocurrency Consulting Course Never miss the details.

What are the different types of airdrops?

Although their main motivation is to incentivize users, crypto projects may give away free crypto in many different situations.correct Cryptocurrency education Can help you get the right insights into various types Encrypted airdrop.

Here are some of the most common types of airdrops:

  • Standard airdrop
  • Bounty airdrop
  • Exclusive airdrop
  • Holder airdrop

standard Cryptocurrency Airdrop transfers a specific amount of local coins or tokens to an existing wallet as a marketing strategy. During their initial token issuance, it usually promotes the brand and encourages more people to adopt the asset. All you need to do is create an account for the new project and provide your wallet address during the distribution event.

Investors use Bounty airdrops as a marketing strategy, but their recipients must participate in some promotional activities to obtain digital assets.

These activities include:

  • You can share posts about blockchain projects on Twitter or other social media platforms
  • Subscribe to email newsletters
  • Participate in the forum and participate in the project
  • Bounty airdrops require more work than standard airdrops, but the tasks are usually not too onerous.

A cryptocurrency airdrop is a group of people or Cryptocurrency developers Those who follow the airdrop aggregator will receive cryptocurrency. These third-party websites publish news about crypto projects and their upcoming airdrops.

Those with a small amount of others Cryptocurrency trading In their wallets are eligible for the holder’s airdrop. Crypto projects usually take a snapshot of encrypted assets on a specific date, and then allow people to apply for airdrops based on their assets on that date.

For example, Stellar is a cryptocurrency launched in 2014. To pay tribute to the Bitcoin network, its leaders announced a plan. They will provide existing Bitcoin (BTC) holders with airdrop lumens (XLM) of their native cryptocurrency at a price of US$19 billion in 2016.

You must verify your Bitcoin holdings to receive XLM rewards from the Stellar airdrop.

How does the crypto airdrop compare to other methods of distributing funds?

Encrypted airdrops can be an excellent way to enhance your encrypted investment portfolio without purchasing digital assets. In addition, they may allow you to enter the bottom of the new platform.It’s better to understand them in one process Cryptocurrency courses, And correct Cryptocurrency learning Technology, you will understand how airdrops are better.

However, empty investment assets may also be worthless. You may spend time looking for and applying for airdrops, only to see that the price of airdropped coins drops before you sell them.

The risk of providing money or sensitive information to fraudulent platforms is greater.One Cryptocurrency expert And enthusiasts are more likely to benefit from the airdrop. Because they like to keep abreast of new developments and actively manage their investment portfolios on a regular basis.

What is the process of receiving encrypted airdrops?

You can add crypto assets to your portfolio through crypto airdrops without having to purchase any fiat currency assets.

You can track encrypted airdrops in the following ways:

  • Regularly search online for airdrop opportunities in cryptocurrencies
  • Join the airdrop aggregator and register for their exclusive airdrop
  • Register to take advantage of any standard airdrop provided by the new platform
  • Pay attention to promising projects and prepare for the bounty airdrop
  • The key to taking advantage of the upcoming airdrop is to master development and seize opportunities when they arise.

Airdrop scams: how do they work?

If you want to airdrop, you need to protect yourself from airdrop scams. Fake airdrops or fake key scams are when scammers try to obtain your funds or private keys under the guise of airdrops to you.

Never give your private key to an untrusted party or connect your wallet to an untrusted website. Sometimes, scammers will even airdrop a fake token into your wallet, and you will not find fraud until it is too late to exchange or sell it.

Take time to research the leadership of a project. Read its public documents before applying for airdrops and measure the sentiments of other investors.

How does crypto airdrop affect taxation?

Platforms that airdrop cryptocurrencies to your wallet usually require you to pay taxes on the proceeds. Generally, airdrops are taxed at their fair market value on the day they are received as ordinary income.

If you decide to sell, you may also need to pay the capital gains from the appreciation of the empty investment assets during the holding period.

What is the difference between an airdrop and a hard fork?

Airdrops aimed at increasing the adoption rate are the main purpose of airdrops. A hard fork is similar to an airdrop, but is different in nature.

Due to the hard fork, a single blockchain has two independent parallel chains. After the split, coin holders on the original chain can also receive coins on the new unique chain.

Members of the blockchain community may disagree with the current functions of the blockchain, leading to a hard fork. If not all miners agree to the new changes, the chain may fork.

As a result, the verification software on the new chain was rewritten. The old chain no longer recognizes blocks created based on the consensus rules of the new chain. Then the same amount of new cryptocurrency can be provided to users.

Airdrop: Why do crypto projects do this

Encryption projects are the biggest beneficiaries of such incidents. They give generous rewards through airdrops. Learn why airdrops are critical to the success of crypto startups.

Blockchain startups conduct airdrops mainly to raise awareness. When crowdfunding is still in its infancy, ICO dominates. But soon, the problem appeared. In this gold rush, startups have only a thin and partially plagiarized white paper on hand. It oversaturates the market and scares away investors.

In addition, countries such as China have completely banned ICOs, and US regulatory agencies such as the US Securities and Exchange Commission have also begun targeting ICOs involving domestic investors in the United States. Soon a legal and tempting method is needed to hype new projects. The solution is simple. Distribute free coins. Cryptocurrency supporters frantically get airdrops and “time out”. Airdrop recipients are the most outspoken advocates the project can hope for. Anyone in the crypto community active on social media may agree with this. For cryptocurrency startups, this is a match made in heaven. It allows them to expand organically by simply paying a small portion of tokens.

  • Provide rewards for users

Investors in the crypto ecosystem usually only care about their return on investment (ROI). They do not care about the long-term sustainability of the project. So they jumped from one project to another, dumping heavy bags behind a pump. They get huge profits from small investors without providing actual value for the agreement. Such behavior may damage the cryptocurrency platform.

As a countermeasure, some startups provide free coins to reward loyal users. why? Use their platform or continue to hold a certain amount of tokens for a specified period of time.

  • Decentralization of token distribution

In the early days of coins, wealthy investors might use their different wealth. They got a cheap price, which allowed them to hoard a large amount of token circulation supply. One of the main weaknesses of Dogecoin is that a large number of coins in the hands of a few people can cause centralization.Such projects can choose to proceed Encrypted airdrop To balance the distribution of tokens.

in conclusion

As a community incentive, airdrops are a harmless marketing gimmick that benefits new projects and their early supporters. Cryptocurrency beginners and enthusiasts who wish to enter promising projects as early as possible may make a fortune from these tokens. Because this looks like a small fish at first.

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