Altcoins Talks - Cryptocurrency Forum
Crypto Discussion Forum => Cryptocurrency discussions => Topic started by: taera249 on January 07, 2018, 08:34:27 PM
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Why would blockchain projects give away free tokens?
If you're not paying for the product, you are the product. With doing an airdrop the project creates awareness about their ICO or token. It brings people to the project that otherwise would not have owned or heard about it. It could lead to token price appreciation, since people value a token they own higher than a token they don't own. This is called the endowment effect.
Airdrops create a community/network of people who own the tokens. If you would list the token distribution after an ICO in a pie graph, a large part of the pie is still owned by the Dev's or project. Another large part is owned by people who joined a pre-sale. And a reasonable part is owned by people who invested in the ICO. An airdrop adds an extra slice to the pie and that slice will have the most people in it.
An airdrop also plants a seed. When you look at Coinmarketcap you will see a list of thousand coins. Just on page one you can see 100 coins listed. However if you have or had a coin that name is still in your brain. The seed is planted and whenever you check Coinmarketcap and scroll down, the name of the free e-Coin will jump out and people will check how it is doing. If they see an article that the free e-Token is doing well or bad, they are more likely to click it if they own it or previously have owned it. It's just like advertising!
Looking forward, possible crypto 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. Like we already see happening at the Ethereum, Waves, NXT & Komodo platforms.
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The main reason behind an airdrop is to get attention for the new coin or company. Free stuff always brings in some attention, that's the same as in the real world.
Other reasons are that for airdrops people often must download an app or a wallet, register on a companies website or in a forum, agree to get a newsletter etc. So the new coin for example has 10.000 registered users after the airdrop. At that point of course you are the product in a way.
When it comes to ICO's it's often a numbers game for the companies who give huge airdrops or bounties, as they can advertise that they already have thousands of registered customers or investors, and many many followers on Twitter, Facebook etc. Of course that attracts more real investors.
Airdrops in connection with ICO's often lead to the strange result that the value of the new token goes down as soon as the airdrop & bounty are distributed, because many people just want to get free money as soon as possible. Many ICO airdrops & bounties now are given only after a month the new token is listed to prevent people from selling their free stuff on the first day.
http://www.altcoinstalks.com/index.php?topic=1919.0 (http://www.altcoinstalks.com/index.php?topic=1919.0) gives more info.
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I noticed that tokens that do airdrops has the tendency of having a successful tokensale but I always wondered how that was possible since airdrop hunters are not known for investing in projects.
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Because as a media campaign to introduce the cryptocurrency. Usually done by a new cryptocurrency that is looking for market share. With the existence of these free tokens, people will be interested in the project and keep up with the developments of the token project. This method is very effective for initial introductions
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Good point. It's a win_win situation for both parties. The Blockchain owners gain as their projects gains more popularity through the airdrop while the participants gain by earning tokens
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Airdrops aren't free per se. it is more like a give and receive proposition. Airdrop hunters create awareness about the project, the project team rewards them in turn for their effort.
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Yeah, that's true. But usually Airdrops participants sacrifice their precious time for it. Some airdrops are the ones that makes some projects successful
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It improves adoption. More people uses/have the coin, there are less monopoly. This is the meaning of "distributed" "decentralized" networks. I love airdrops because of these.