An airdrop is an unsolicited distribution of a cryptocurrency token or coin, usually for free, to numerous wallet addresses. Airdrops are often associated with the launch of a new cryptocurrency or a DeFi protocol, primarily as a way of gaining attention and new followers, resulting in a larger user base and a wider disbursement of coins.[1] Airdrops have been a more important part of ICO after the crypto entrepreneurs have started doing private sales instead of public sales to raise initial amount.

Airdrops aim to take advantage of network effect by engaging existing holders of a particular blockchain-based currency, such as Bitcoin or Ethereum in their currency or project.[2]

In the United States the practice has raised policy issues about tax liability and whether they amount to income or capital gains.[3]

A dusting attack is one important risk of crypto airdrops to take into consideration.[citation needed]

References

  1. ^ Van Boom, Daniel. "Crypto airdrop season: Why people are making thousands for 'free'". CNet. Retrieved 8 March 2022.
  2. ^ BJORØY, Trond Vidar (2017-09-06). "The latest crypto PR craze: 'Airdropping' free coins into your wallet". venturebeat.com.
  3. ^ "Bitcoin Is on a Collision Course With the IRS". Fortune. Retrieved 2018-01-17.