The crypto space is constantly going through a lot of changes and we see new innovations every day. Recently, a trend has been getting a lot of attention amongst investors and traders, known as airdrops. Today, we’ll introduce you to airdrops and explain why everybody is talking about them.
What are Airdrops?
An airdrop refers to a “free” ICO where a company releases a number of tokens to the public, for free. That means that people can obtain coins and tokens simply by signing up. It’s that simple. This brings a lot of attention to the company doing so, which is one of the main reasons why these companies do it in the first place.
What is the difference between an ICO?
An ICO is when a company releases coins or tokens in a “crowd sale” style, usually with the objective to raise money and fund their activities. Initial Coin Offerings have been extremely popular in the cryptocurrency space in the last few months, and thousands of new tokens belonging to startups and young companies have seen the light of day. Users can invest in pre-sales or ICOs directly and receive tokens in exchange for their investment. In that sense, airdrops are different from ICOs because individuals invest money (fiat) in order to get tokens.
Why is everybody talking about them?
Airdrops are suddenly all the rage within the industry, as multiple companies are launching their own. Virtual currency enthusiasts are looking forward to new airdrops every week and numerous calendar websites exist to track upcoming ones. The opportunity to eventually make a profit and the excitement around the blockchain technology are the main reasons why these are currently very successful.
Not all airdrops are winners
In some cases, airdrops can turn out to be extremely lucrative. Since the value of tokens can increase, large profits can be made if the individuals who have received them sell them later on. However, this is not always the case, as some tokens never take off or lose their value over time. This is why there is a lot of FUD around airdrops. A lot of people claim that they are scams or that they should not be taken seriously.
Will airdrops continue to rise in popularity? Will large companies and exchanges like Coinbase or Circle become interested in these kinds of token releases? Time will tell, but for now, it is smart to follow airdrop releases and sign up for an airdrop tracker!
TLDR: Airdrops are free token releases by companies who wish to gain popularity and attract investors. Most of the time, tokens don’t bring a lot of profits but occasionally some do.