What Is A Cryptocurrency Airdrop And How To Get It

Crypto investors use different ways to purchase digital coins. The most popular option is to buy them on a crypto exchange or do it directly from holders. Nevertheless, there is another way to get digital assets, and that is by participating in cryptocurrency airdrops. In this article, we will tell you more about this phenomenon, including the types of airdrops and the way they work, and explain how to start receiving the crypto using this method.

How Does Airdrop Work?

Let's take a closer look at what an airdrop is about. So, crypto airdrop refers to the process of distributing free tokens or coins to active users. Such activity is usually executed by blockchain projects as part of their marketing strategy, where tokens are used as a means of rewarding users or increasing the community engagement level.

Airdrops occur in a variety of ways. For example, the crypto project launching it may announce it in advance and allow users to register and fulfill tasks for participation. Among such conditions are the project's social networks following or storing a certain amount of money in a crypto wallet. Sometimes the coin share can be spontaneous; it could be the project’s significant date.

Types Of Airdrops

There are several types of airdrops, which differ in terms of implementation conditions. Let's see in more detail:

• Standard. This type of airdrop assumes that users receive a certain number of tokens by subscribing to the service.

• Holder. Rewards are distributed among users who have certain tokens in their wallet; for example, they hold BTC or ETH for a long time.

• Bounty. Tokens are paid out for completing simple tasks, such as following the project's social media accounts or recommending it to friends.

• Exclusive. Tokens are distributed to a selected group, for example, the first followers or token holders of a particular project.

• Fork. During a blockchain fork, the original token holders receive a new crypto. For example, Bitcoin Cash was sent to Bitcoin holders during its fork.

• Raffle. In this case, recipients are selected randomly from a participant pool who have completed tasks.

The goal of every airdrop, regardless of kind, is to raise token liquidity and user engagement. Additionally, it is a highly practical and affordable chance for investors to get cryptocurrency.

How To Find Cryptocurrency Airdrops?

When you search for cryptocurrency airdrops, you need to actively monitor the market to be aware of new projects in time. Of course, you need to use reliable sources, as there are a lot of fake airdrops in the field. We have collected several effective ways to find actual airdrops and avoid cryptoscams:

• Source 1: Airdrop aggregator sites. These are specialized resources where you can find up-to-date information on airdrops. Among such services are Airdrop Alert, Airdrops.io, and CoinMarketCap Airdrop.

• Source 2: Official project websites. Various crypto projects often announce new airdrops on their websites. They also give details about the participation terms there.

• Source 3: Social networks and forums. Many projects have blogs on Twitter or Telegram channels where they tell about their airdrops. Information can also be found on the “Airdrops” or “CryptoCurrency” sections.

• Source 4: Cryptocommunities. Members of cryptosphere forums and communities, such as BitcoinTalk and DAOs, can get insider information about further airdrops.

• Source 5: Wallets and exchanges. Some cryptocurrency wallets and exchanges cooperate with projects launching airdrops and offer users to participate. For example, among wallets these are Trust Wallet and MetaMask, and among exchanges there are Binance and KuCoin.

• Source 6: DeFi and dApps. Users of DeFi projects and decentralized apps can become participants in airdrops if they have staked or transacted using their platforms.

How To Receive Airdrop?

Now you know the ways you can follow to find a crypto airdrop, so you are already one step ahead of it. To get it finally, you need to be acquainted with several steps, which we outline below:

• Step 1: Set up your wallet. Make sure you have a cryptocurrency wallet that supports a specific token or blockchain, or create a new one. Wallets on crypto exchanges offer more functionality than single apps, so they are best to use. For example, the Cryptomus wallet allows you to store more than 20 types of coins and convert them at the current exchange rate when needed. The wallet is also guarded by AML and 2FA, so your funds will always be secure here.

• Step 2: Choose and research the project. Use one of the airdrop searching services we gave you above and select the most attractive one for you. Research the project: learn about the team, find the community, and get official documents. Make sure the project is legitimate.

• Step 3: Complete the requirements or tasks. Depending on the type of airdrop, you will need to fulfill the project instructions. It can be subscribing to the project's social media, purchasing certain tokens, or just registering to participate.

• Step 4: Get your tokens. Once the airdrop campaign is complete, crypto will be automatically sent to your crypto wallet. In some cases, receiving the coins requires your participation as well; for example, you may need to send a message using your wallet or complete verification steps. Therefore, keep an eye out for project announcements.

After receiving tokens from airdrop, you will be able to dispose of them as you want. You will have the opportunity to use them both in the project ecosystem and within your wallet; for example, store, stake, or sell them.

Can You Make Money On Airdrops?

As airdrops are about getting tokens and coins for free, you can easily make money with this method. However, you should remember that the profit will depend on several factors.

At the moment you receive tokens as a result of airdrop, their market value may be low, so the profit may not be very high. You can increase it if you hold the assets for the long term and expect prices to rise. You can also stake your assets at different APR levels and earn additional rewards. This possibility will depend on the coin and the crypto exchange you use.

Do You Have To Pay Taxes On Airdrops?

The need to pay tax for crypto that was obtained after airdrop depends on the particular country's legislation. We’ve already talked more about cryptocurrency taxation in this article. If there is such a requirement in your region, the tax is usually paid under the following terms:

• Income tax. In some countries, the crypto result of airdropping is taxable income. In this case, you have to report your profit on your tax return.

• Capital gains tax. If you sell the airdrops’ tokens, the profit from the sale will be subject to capital gains tax. The amount of tax will depend on the length of time you have stored the tokens and the increase in price over that period.

To avoid problems and act within the law, keep accurate records of the date you receive and act with the airdrops’ tokens. Also check your country's laws regarding cryptocurrencies or consult a tax professional.

Airdrops are an essential part of the cryptocurrency ecosystem that benefits both investors and blockchain projects. By fulfilling simple requirements, users can get tokens absolutely free, thus contributing to the project’s development. Nevertheless, it is worth being careful when choosing a project, making sure it is legitimate, and then disposing of your assets within your country’s laws.

We hope this guide was useful to you, and you know a lot more about airdrops now. Have you had any experience participating in airdrop projects? Or are you just planning to do it? Tell us in the comments below!