Airdrop (Cryptocurrency) – Definition

Cite this article as:"Airdrop (Cryptocurrency) – Definition," in The Business Professor, updated April 16, 2020, last accessed October 28, 2020,


Airdrop (Cryptocurrency)

An Airdrop is used in Cryptocurrency to describe the free distribution of token or coin made to numerous wallets. Free distribution of virtual currency tokens or coins is often made to the wallets of community members as a reward or compensation for achieving certain tasks. Sometimes, airdrops are distributed to attract new followers and build a larger community. Airdrop is also defined as a distribution process through which a cryptocurrency enterprise sends tokens or coins into accounts of members for free.

A Little More on What is Airdrop (Cryptocurrency)

Airdrop is often used in the cryptocurrency world as a promotional strategy by blockchain startups and emerging cryptocurrency enterprises. It entails the distribution of free coins and tokens to the wallets of community members to attract traction for their virtual currency projects and also build a larger community.

Airdrop refers to a process used by a cryptocurrency enterprise to create awareness for its virtual currency project by distributing free tokens and coins to community members. Airdrops are free gifts distributed to wallets, they could be a reward for completing a task.

There are certain eligibility criteria community members must meet before they qualify for the free tokens, these include;

  • Holding a minimum quantity of the crypto coins in their wallet.
  • Creating awareness for a virtual currency project such as posting promotional content on social media handles and others.
  • Completing specific tasks.

Reference for “Airdrop (Cryptocurrency)” › Airdrops › Hard Fork

Academics research on Airdrop (Cryptocurrency)

Initial coin offerings: Financing growth with cryptocurrency token sales, Howell, S. T., Niessner, M., & Yermack, D. (2018). Initial coin offerings: Financing growth with cryptocurrency token sales(No. w24774). National Bureau of Economic Research.

A brief survey of cryptocurrency systems, Mukhopadhyay, U., Skjellum, A., Hambolu, O., Oakley, J., Yu, L., & Brooks, R. (2016, December). A brief survey of cryptocurrency systems. In 2016 14th annual conference on privacy, security and trust (PST) (pp. 745-752). IEEE. Cryptocurrencies have emerged as important financial software systems. They rely on a secure distributed ledger data structure; mining is an integral part of such systems. Mining adds records of past transactions to the distributed ledger known as Blockchain, allowing users to reach secure, robust consensus for each transaction. Mining also introduces wealth in the form of new units of currency. Cryptocurrencies lack a central authority to mediate transactions because they were designed as peer-to-peer systems. They rely on miners to validate transactions. Cryptocurrencies require strong, secure mining algorithms. In this paper we survey and compare and contrast current mining techniques as used by major Cryptocurrencies. We evaluate the strengths, weaknesses, and possible threats to each mining strategy. Overall, a perspective on how Cryptocurrencies mine, where they have comparable performance and assurance, and where they have unique threats and strengths are outlined.

Autonocoin: A Proof-of-Belief Cryptocurrency, Abramowicz, M. (2015). Autonocoin: A Proof-of-Belief Cryptocurrency. GWU Law School Public Law Research Paper, (2015-8). This paper proposes a self-governing cryptocurrency, dubbed Autonocoin. Cryptocurrency owners play formal tacit coordination games by making investments recorded on the block chain. Such investments represent bets about the focal point resolution of normative issues, such as whether a proposed change to Autonocoin should occur. The game produces a result that resolves the issue. With a typical cryptocurrency, the client software establishes conventions that ultimately lead to the identification of the authoritative block chain. Autonocoin completes a circle by making transactions on the block chain determine the authoritative client software. The distributed consensus mechanism embodied by formal tacit coordination games, meanwhile, can make other types of decisions, including which of competing block chains is authoritative and whether new Autonocoins should be rewarded to benefit those who have taken actions to benefit Autonocoin. This establishes a unique funding model for a cryptocurrency, and it addresses objections to cryptocurrencies issued predominantly to the initial founders, as well as to those that encourage wasteful mining activities.

How to Make Money Investing in Cryptocurrency, Guides, T. S. (2019). How to Make Money Investing in Cryptocurrency.

Airdrops and Privacy: A Case Study in Cross-Blockchain Analysis, Harrigan, M., Shi, L., & Illum, J. (2018). Airdrops and Privacy: A Case Study in Cross-Blockchain Analysis. arXiv preprint arXiv:1809.05360.

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