Token airdrops seem to be a thing in crypto PR right now. An airdrop is basically when a blockchain project decides to distribute free tokens, or coins, to the community. This happens after the project has completed its ICO and the token has become tradeable on the open market.
In most cases, to be a recipient of an airdrop the only requirement is that you have some coins from the relevant blockchain stored in your wallet — ie, if the company doing the airdrop is based on Ethereum, you need to have some ETH; if it’s based on Bitcoin or Ripple, you need to own some BTC or XRP. You need to be keeping your coins somewhere that has you in control of your own private keys, i.e. not on an exchange (where you really shouldn’t be storing your coins anyway, unless you’re using them for trading).
The format of these giveaways is usually like this: At a pre-announced time the project behind the event will take a ”snapshot” of the blockchain, and anyone holding Ether at that point will receive a certain number of free tokens.
One company with an upcoming airdrop, is Omise (which became the first Ethereum unicorn, with a market cap of $1 billion last week). This week they will be giving away 5 percent of the total amount of their token, OmiseGO. Any wallet address that held a balance over a minimum threshold of 0.1 Ether at the point of their snapshot, which was over 450,000 addresses, will receive a share of this 5 percent that is proportionate to their share of Ether.
Blockchain projects SingularDTV and Golem have announced they will re-airdrop the OmiseGO tokens, meaning they will distribute the tokens back to their respective token holders. We will probably see more companies doing the same.
There are also organizations, like the Blockchain Education Network, that organize airdrop events to raise awareness of cryptocurrencies in general. Events like this are a great way to increase adoption and introduce new people to the concept of cryptocurrencies, whereas the Omise approach works for companies and projects that want to ensure a wide distribution of their coins, among people already ”in the know.” Omise said this is its way of ”rewarding participants and supporters and increasing the usage of ERC20 tokens which will further reinforce trust between investors, developers, and miners.” (ERC20 is a standard for tokens on the Ethereum blockchain.)
The mood I’m picking up from the Ethereum community is that the gesture is appreciated and a nice way to say thank you to all those
investors speculators who couldn’t get in on Omise’s ICO.
When something is free you’re the product
Now, companies obviously don’t do airdrops just because they’re such nice guys. It’s all part of an elegant PR plan, which ultimately will lead to an increase in token value. In addition to an airdrop being free advertising, it connects people already in the crypto community to your project and gives everyone the same incentive: token price appreciation.
The endowment effect suggests that individuals value something higher if they own it. In the case of OmiseGO, there will suddenly be half a milion people who see OmiseGO as more valuable than other tokens simply because it was dropped into their wallets. Many will also keep on accumulating the currency now that they already feel like investors. Basic tendencies towards risk aversion, hoarding, and completionism probably also comes into play, with some being tempted to buy more OmiseGO to achieve round numbers, and increasing their current stack instead of diversifying further with new tokens they don’t know and thus consider to have higher risk.
Looking forward, possible airdrop developments could be projects starting to gift tokens to users who hold tokens in projects that overlap or have some synergy with their own. We could also see projects encouraging other projects to airdrop to their token owners and receiving some benefit in return.
If you are an investor holding a diverse portfolio of coins you are likely to be receiving more and more free money as this concept keeps gaining popularity.
And as always when venturing into cryptoland, beware of scam airdrops trying to steal your coins. Never give out your private keys or wallet file or click suspicious links.
Now go check your wallets, there might be some coins there you didn’t know about from a previous airdrop.
Trond Vidar Bjorøy is head of product development and implementation – Nordics at travel management company ATPI.