Airdrop (Cryptocurrency)

An airdrop is an unsolicited distribution of a cryptocurrency token or coin, usually for free, to numerous wallet addresses. Airdrops are often associated with the launch of a new cryptocurrency or a DeFi protocol, primarily as a way of gaining attention and new followers, resulting in a larger user base and a wider disbursement of coins.^[1] Airdrops have been a more important part of ICOs since crypto entrepreneurs have started doing private sales instead of public offerings to raise initial capital.^{[citation needed]} One example of this is by the company Omise, which gave away five percent of its OmiseGO cryptocurrency to Ethereum holders in September 2017.^[2]

Airdrops aim to take advantage of the network effect by engaging existing holders of a particular blockchain-based currency, such as Bitcoin or Ethereum in their currency or project.^[3]

In the United States, the practice has raised policy issues about tax liability and whether they amount to income or capital gains.^[4]

References

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