Know about working of crypto airdrops; Are they safe?

With the availability of various crypto websites, it has become easier for crypto enthusiasts to keep track of the prices of cryptocurrencies including Bitcoin and altcoins. Suppose if you search for ETH price prediction 2022, then it is $3,085.22 currently. Or if you are interested in knowing Ethereum price prediction 2025, then it is expected to reach $10,500. Apart from keeping track of crypto prices, a crypto enthusiast can also brush up his knowledge on various topics related to the crypto-verse. One such is crypto airdrops. 

Crypto airdrops: what are they?

Crypto users who often get in touch with new and current platforms are expected to get an airdrop at some point in time. Airdrops can be defined as those practices that are based on blockchain projects where the free distribution of tokens is sent to the members of the communities. In other words, you can call it a marketing strategy. 

The main objective behind this marketing practice is sending newly minted tokens to thousands of varied wallet addresses with the motive to engage the recipients towards the corresponding project. It is even to gather knowledge of cashing out free tokens into something else. It is just like a free discount card that you found in your mailbox. This strategy is intended to make you explore the new store nearby your area. 

One must note that crypto airdrops are the strategy to make people aware of new services and projects not just making recipients spend money. Mostly the issuing of a crypto airdrop to users is done in exchange for finishing a particular task. These tasks are:

• Users have to follow a social media account

• With that being done, they have to retweet and share posts like hashtags

• Sending transactions or getting them via a crypto wallet and a crypto exchange

• To get ongoing updates, users must have an account and sign up. 

A crypto airdrop doesn’t need to only ask users to complete certain tasks. Sometimes, there is no need to do anything. 

Reason for the existence of crypto airdrops

As has been cleared above, the main objective of conducting crypto airdrops is boosting a service, project, or startup. When users are issued tokens, it becomes possible for the team to begin their project and ensure fair token distribution among its community from the initial day. 

Moreover, those who receive the tokens are given an incentive to spread awareness. Once the token starts its trading journey on an exchange, it gives a boost to the project in reaching the maximum audience. The more there will be a craze for the token, the more it brings the possibility of a rise in its price of it. Note that users will never be asked for investment by genuine and legal crypto airdrops. Rather it is a tactic to rise above the competitors that routed for external funding even without token issuance. 

How do crypto airdrops work

To know the working of crypto airdrops, you must be familiar with 3 major ways on basis of which this marketing tactic is practiced. 

• Users are supposed to finish a minor social task. Only then they will be qualified in getting the airdrop at some time. 

• Tokens are distributed automatically to those holding a certain asset or balance on the blockchain, where the occurrence of an airdrop becomes possible.

• Users can claim their airdrop tokens after seeing the blockchain snapshot of the previous date. They can do this via a smart contract on the website of the concerned project. 

Are crypto airdrops safe?

Crypto airdrops are indeed very famous, but that does not mean they are free from risks always. It is because when people get money in their wallets, without any cost, there is a possibility that airdrops might be nothing but a fraudulent scheme. The creator who issues the token is hopeful about the craze brewing around it on getting listed on an exchange. When the trading of that token starts, the substantial size of the tokens is sold by the creator, thereby ramming the price.

There is another risk involved called a dusting attack. A scamster tricks an innocent user by sending a minor amount of cryptocurrency to destroy his privacy. After that, the attacker will trace down the transactional activity of the wallet token that has been distributed to remove the identity of the person or a firm behind the functioning of the wallet.

The U.S. Internal Revenue Service considers crypto airdrops as an income. So this indicates that when you get the number of free tokens, then one has to make a tax payment on them. It does not matter whether you wish to have the airdrop in the first place or not. 

How you can be entitled to crypto airdrops

Crypto airdrops are mainly meant for promotional and marketing techniques. Hence, this can be very problematic in ensuring eligibility for upcoming events. All airdrops differ from each other based on individual needs regarding eligibility. Below are the other options you can refer to. 

• You need to search for genuine crypto airdrop sites, where you will be notified on your email id. 

• If you are a regular user of social media then you can check for the #airdrop hashtag, and see what is new. 

• You must actively use distinctive crypto products, blockchains, services, and platforms. 

• Also, you should be exploring crypto news portals and forums where you can get new updates on current and future airdrops.

Final words

So this is all about crypto airdrops that you have been reading about in this article. Today we explained to you what are they, their use, and the risks associated with them. Plus, tips to get entitled to airdrops. If you want to stay abreast with the recent and future airdrops listing, then Cryptoknowmics is the best website to flock to.