Thus far, nearly $50 million in crypto donations has directly reached the Ukrainian government. In response, Ukraine announced it would conduct a crypto airdrop. But, this news has many less-knowledgeable investors confused, as they wonder, “What is an airdrop?”
Airdrops are a less talked-about occurrence in the crypto space, but they are events that can be very beneficial to everyone involved. Ukraine’s announcement appears to be introducing a lot of people to the concept. And although it has scrapped the idea, the announcement has piqued the interest of many.
So, what are they? Here’s what you need to know.
What Is an Airdrop? Cryptocurrency’s Over-the-Air Reward System, Explained.
- If you’re an iPhone user, you’re likely familiar with the airdrop function. Using it, a person can quickly distribute a file to others in geographic proximity. Tesla (NASDAQ:TSLA) also uses an airdrop feature to conduct software updates on vehicles without requiring customers to come in for service.
- An airdrop in crypto is similar. They occur when a project or crypto owner decides to distribute masses of coins or tokens to others.
- Airdrops are most commonly used as a reward mechanism for participating in a project in some way.
- They are also commonly used by newer projects, most often as a way to build notoriety.
- To participate, a user must typically either sign up or hold a specific cryptocurrency in their wallet.
- In the case of Ukraine’s airdrop, the country was planning to send tokens to the wallets of users who donated to its crypto fund.
- It is worth noting here that airdrop scams do exist; in the wake of the canceled airdrop, several Ukraine airdrop scams are popping up in an effort to take advantage of donors.
- Airdrops take place at scheduled times, after which users have the tokens dropped into their wallet.
- Airdrops most often distribute fungible tokens. Non-fungible tokens (NFTs) can be airdropped, but are more often claimed directly by users. Ukraine, after ditching its airdrop, says it now plans to release NFTs.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
