Initial Coin Offerings really enjoyed a great year in 2017, blowing up all over the world and becoming a source of generating more revenue than ever thought logical, let alone possible but they did become popular.
While the whole ecosystem was still in the midst of figuring out what ICOs are, their applications and implications, everybody started receiving airdrops. With the whole world of cryptocurrencies buzzing with the prospect of ICOs and airdrops, a lot of people want to know what exactly the big deal with ICOs and airdrops is.
This post is dedicated to telling you a bit about ICOs and the key points to consider about airdrops.
What Exactly Is An Initial Coin Offering?
A lot of people might be thinking that ICO sounds an awful lot like IPO. IPOs or Initial Public Offerings are something that belongs in the realm of the traditional financial market where businesses “go public” and sell stocks from the business to raise funds to move forward. An ICO is a similar concept. It is somewhere between an IPO and crowdsourcing and it came into existence not long after the advent of cryptocurrencies and the blockchain technology that powers it.
Blockchain technology is the disruptive technology that’s on the basis of the whole cryptocurrency ecosystem. To put it very briefly, it is a decentralized ledger system which allows corresponding parties to transact anything of value between them without any central authority validating the transaction. The validation is instead done by the whole network of computers that is solving complex cryptographic puzzles. It enables what is called trustless transactions between people.
Blockchain technology was invented to facilitate a decentralized payment system by the creators of Bitcoin, the world’s first cryptocurrency but it has utilities expanding far beyond and one of them was for companies to raise funds using it. That’s what ICOs are really about. ICOs are crowdsourcing done using blockchain.
Airdrops and Initial Coin Offerings
Now that you have a fair enough idea of what Initial Coin Offerings are, it is time you get a grip on what airdrops are.
To define what airdrops are in the simplest of ways, it is the phenomenon where a blockchain company that is starting up will give away a few free tokens across the blockchain network in order to get their ICO project up and running. It is essentially a marketing technique for Initial Coin Offerings. This is why you can consider the airdrops to be freebies.
Airdrops are a very effective marketing tool for ICOs. It is not something that’s done randomly. The airdrops are given away by the businesses launching ICOs in a highly calculated manner. They will look for a few pre-ordained conditions that people must be fulfilling, in order for businesses launching ICOs to give them the airdrops. For instance, Business A might have a condition that the people whom they’re giving airdrops to are those who are active traders in the cryptocurrency world.
A Brief Look At How Airdrops Came About
Airdrops have been around for a while considering the brief history of the cryptocurrency world. For instance, if you’re an active Ethereum user and you have had a substantial amount of Ether in your wallet for a while now, you will notice some sort of extra random token in your wallet. This isn’t some accident, it is not divine providence – it is the coin’s team deeming you worthy of receiving some of the amounts that they are giving away to Ethereum users.
In such a situation once you get the token, one of the first things you might do is conduct some quick research as to why the mystery coin is suddenly there in your wallet without you having received it from someone or having accepted it. You might also consider asking someone else about the new random coin that you have in your wallet. Or you might just ignore the mystery coin altogether.
If your reaction is either to research about the random coin or to talk to your friends about the coin, you will have fulfilled the purpose of the airdrop. You will have either gained more knowledge about it through your inquiry into the matter or you will have spread the word about the new token by taking to your friends. For a small price, the business launching the ICO will have succeeded in marketing what they’re offering. If you ignore it altogether, the marketing effort has failed.
When you really think about it, the whole concept of airdrops cannot just be considered as merely marketing an ICO. It goes a step beyond that and is more or less an activity which is building up the value of a new coin as the bonuses the token holders will receive with the ICO being conducted is going to be as high as the number of tokens they have. When you receive the mystery tokens, it will take about a month or two until you see the actual coins credited to your wallet since the airdrops are mostly done during or just before an ICO is being conducted.
Be sure to check your Ethereum wallet to see if you’ve received any airdrops recently. You don’t need to use your private key to access your Ether wallet just for the sake of checking the balance. You can just check it out using the Token Tracker.