The two most beautiful words to any investor are “free money.” Free money is why you open 401(k)s and contribute the maximum when your employer offers a matching fund. Free money is why you look for deals. And, in the altcoin space, free money can be a way to get attention for your new coin.
An airdrop is altcoin investor slang for a coin giveaway. There are all sorts of reasons to do this; the altcoin may be designed for a purpose beyond buying and holding it, for example, and they’re handing out an airdrop in order to get everyone used to the concept. But more often than not, it’s free for the same reason marketing companies have given away free stuff since the beginning of time: to get attention.
It is, to put it mildly, absurdly competitive in the altcoin space, and since starting your own is just a matter of downloading and tweaking some software, more and more coins are appearing all the time. That makes it harder and harder to get attention as your new altcoin rolls out and gets buried by a throng of others the next day. Nothing gets attention like free money, so those running the coin see it as a form of investment. Drop the coins now, and get the returns in the form of popularity later. If investors hold, it drives up the scarcity of the coin, which also helps. That assumes, of course, that those getting the airdrop don’t unload it when the price crosses a certain threshold. To learn more about airdrops, subscribe to the Bitcoin Market Journal newsletter today!