What Is Airdrop Crypto: Everything You Need to Know

Cryptocurrencies have experienced a real boom in the past few months. Meanwhile, new coins are constantly coming on the market in large numbers. That’s why it’s very hard to keep track of them. Of course, new coins are interesting as a new investment object, but what if I say that it’s possible to receive a few tokens for free. 

A free award of tokens is known as an airdrop. What is airdrop crypto? What coins is it possible to get for free? Well, coins that have been on the market for a long time can carry out airdrops from time to time. So, what is crypto airdrop? Today, we’ll try to find out!

What Is an Airdrop for Crypto: A Key Goal of Airdrops

What is an airdrop for crypto? An airdrop is a so-called equivalent of a free sample in the world of cryptocurrencies. There are a number of reasons to carry out an airdrop. The most common reason is for sure to increase the visibility of your own brand. Cryptocurrencies generally work only if a large number of people know them and believe in them. Accordingly, young, unknown startups use airdrops to attract as many potential buyers as possible.

However, free tokens are also often used by certain services as a reward for an activity such as loyalty or advertising from users. This has been done in the past by large crypto exchanges such as Binance or KuCoin. Still, what is a cryptocurrency airdrop? Well, in addition, airdrops can be used to distribute a large number of tokens around the world, thus achieving the decentralization that is so important for most coins. For example, an OmiseGo platform distributed tokens via airdrops in order to ensure the stability of its own proof-of-stake system.

What is airdrop crypto? Airdrops also motivate the owners of certain tokens to keep them for as long as possible. If airdrops are repeatedly distributed among the token holders, there are more incentives not to sell them again. This tactic has been used by several major cryptocurrencies in the past.

What Is Crypto Airdrop: How to Find the Best Airdrops?

As a user, you can definitely benefit from airdrops. What is airdrop crypto? What are the key types? Generally, there are two main types of airdrop. An automated airdrop is when a user receives a token reward without having to do anything. The developers then simply send airdrops randomly to various addresses. Often this is associated with owning a specific coin. Many of these automated airdrops take place on the Ethereum blockchain. In order to receive such an automatic reward, all you need is an Ethereum wallet with a little credit.

With a manual airdrop, however, you have to take matters into your own hands. Often these airdrops are connected with small tasks in the social networks. What is an airdrop for crypto? What do you have to do to get coins for free? In order to receive free tokens, you have to share a post or join a Telegram group.

You often have to look for such manual airdrops yourself. In the meantime, there are several websites on which airdrops are listed. Airdrops.io is a market leader in this area. Here you will not only find a list of current airdrops but also receive step-by-step instructions for each airdrop. There are also exclusive airdrops that are only accessible to users who follow Airdrops.io on Twitter and are members of the Telegram group.

What Is a Cryptocurrency Airdrop: Airdrops & Taxes

Once we’ve found out what is crypto airdrop, let’s move further. Cryptocurrencies are a topic that still needs a lot of legal clarification. This also applies to a tax classification of airdrops. The IRS has specified that new coins received through an airdrop are taxed as ordinary income. Moreover, automatic airdrops also have to be taxed regardless of whether you intended to own these coins or not. 

An airdrop token, therefore, doesn’t have a feature of a reward under tax law, but rather resembles a lottery win. According to this logic, airdrops have to be taxed, since a user has to take action to receive tokens. Ultimately, it’s a rather complicated subject. If you want to be safe, you should therefore consult a tax advisor who is familiar with the subject of cryptocurrencies. 

What is a cryptocurrency airdrop? What other interesting facts do you know? Feel free to share your knowledge in the comments!

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