The question “How does a crypto airdrop work?” has been flooding the social media and search engines. But today, I am going to discuss it in details.

If you know a little about the crypto market, you must have heard of the so-called crypto airdrop. It is a marketing tactic used by industry projects to promote and put more tokens and digital currencies into circulation. Thus, users can receive small amounts of cryptocurrencies for free in their wallets. However, it is worth noting that many scams are performed this way!

To better understand this cryptocurrency distribution model , Phonefic spoke with Henrique Teixeira, business development leader at the Ripio group.

“The airdrop is like a donation, a ‘giveaway’. That is, it is a model that distributes digital tokens to a large number of users as part of a given action, whether social, marketing or even more specific campaigns.”

Henrique Teixeira, business development leader of the Ripio group

Why do airdrops?

In practice, most crypto airdrops occur at no cost, or in exchange for retweeting a post from the company issuing the coin, for example. This is a popular marketing method for newly created assets . Its main objective is to publicize a crypto project and get more people to trade the asset when it is listed on an exchange.

According to Teixeira, the aidrop became very popular as new tokens were created. Thus, the model was one of the main forms of mass dissemination of cryptocurrency projects.

In addition to this purpose, Teixeira explains that the airdrop can be used to revive the circulation of coins in an already completed project. For example, if a particular cryptocurrency is experiencing liquidity problems, free distribution of assets owned by the company behind the coin can help.

Airdrops are often promoted on company websites, on cryptocurrency forums, and on social media. The process is usually simple, just leave the address of your digital wallet registered in the campaign and the assets will be sent without asking for more data.

To be eligible to receive the coins for free, it is necessary to have a digital wallet, traditionally of ethereum or bitcoin. In addition, if the distribution does not ask for anything in return, the user will still need to have a minimum amount of cryptocurrencies at the address to differentiate it from robots.

For companies, airdrops can be advantageous for the marketing and engagement generated. However, it is a potentially dangerous tactic. “Many users who receive cryptocurrencies for free by airdrop may end up selling the assets to buy others or exchange them for traditional currencies, forcing the price of the currency down”, explains Teixeira.

How to avoid blows in airdrops?

While crypto airdrops can be beneficial to the user when they are legitimate, there are many scams involving this model . However, differentiating them may not be easy.

Some security tips can help you protect yourself from scammers and hackers. According to Binance , the world’s largest cryptocurrency exchange, the first and most important recommendation is to do your homework. Study about the cryptocurrency and the company that is carrying out the distribution . This step is always necessary to understand the possible risks.

So, before signing up for any cryptocurrency airdrop, especially when you need to connect your wallet to a website, do your research. Scammers sometimes drop tokens in multiple wallets, but when you try to transfer these assets to a cryptocurrency exchange or another address, you will get ripped off.

As Binance exemplifies, in other cases scammers advertise a fake airdrop that leads to a phishing site. They trick users into connecting their wallets to a website that is very similar to the original of a certain company. Once you connect your wallet and sign a transaction, you may have your crypto wallet drained. Therefore, it is important to pay attention to the website address .

Most of these scammers use Twitter to spread fake airdrop campaigns and direct users to fake websites. Some airdrop scams even ask you to send cryptocurrencies to an unknown wallet address to unlock your “free tokens”. Of course, no legitimate campaign would do that .

This is it! I have managed to answer enquiries on how crypto airdrop works.