Summary
Free cryptocurrency giveaways are a marketing strategy adopted by cryptocurrency startups to promote their new cryptocurrency projects and tokens. It includes distributing their original digital currencies to existing or potential users for free. Sometimes, users have to complete simple promotional activities before they can claim it, such as following a project's social media account and sharing its posts.
There are different types of free distributions, and each cryptocurrency project has its own requirements. But most freebies have the same goal: to increase awareness and public interest in the project. Some of them are implemented directly in users' wallets, while others require a manual claim.
Anyone with a cryptocurrency wallet can receive or claim free handouts, but you should always be careful with scammers. There are many fraudulent free giveaways that can steal your wallet funds when you claim or transfer your free tokens. Be sure to verify the legitimacy of the project before claiming freebies. You should be especially careful when it requires you to link your wallet to a free giveaway site.
the introduction
With the ever-increasing number of new currencies, it is difficult for cryptocurrency investors and traders to keep track of all the new projects. As such, some cryptocurrency projects offer free giveaways as a way to stand out and raise awareness. While everyone loves free cryptocurrencies, free handouts are not always legal. Let's see how it works and what you can do to protect yourself from freebie scams.
What are free cryptocurrency giveaways?
Free cryptocurrency distributions refer to the transfer of digital assets from a cryptocurrency project to multiple wallets. The idea is to distribute coins or tokens to existing or potential users to increase awareness of the project. These codes are given away for free, but some free distributions require users to perform certain tasks before claiming them. Free cryptocurrency giveaways became popular during the Initial Coin Offering (ICO) boom in 2017, but are still used as a marketing strategy by many cryptocurrency projects today.
How do free distributions of digital currencies work?
There are different types of free crypto distributions, but they usually consist of distributing a small amount of cryptocurrencies to several wallets (usually on Ethereum or the Binance smart chain). Although less common, there are also projects that give away NFTs as gifts instead of regular cryptocurrencies.
Some projects do distributions without asking for anything, while others require you to perform certain tasks before claiming them. These tasks often include following accounts on social media, subscribing to a newsletter, or keeping a minimum amount of coins in your wallet. However, getting the tokens that are distributed for free is not guaranteed.
In some cases, free distributions are only given to wallets that have interacted with the project platform before a certain date. 1INCH and Uniswap are popular examples that used this method to support early adopters. But unlike common free giveaways, this one was worth thousands of dollars.
Why do cryptocurrency projects implement free distributions?
As mentioned previously, blockchain projects give away free tokens as gifts in an attempt to gain wider acceptance and grow their network. A large number of token holders is often seen as a positive indicator, which makes the project more decentralized in terms of token ownership. Free token distributions also incentivize recipients to use and promote the project. This can help grow the initial user base before listing the project on cryptocurrency trading platforms.
On the other hand, free dividends may also give a false impression of growth. Therefore, it is important to consider other factors when evaluating its acceptability. For example, if hundreds of thousands of addresses hold a certain token, but no one actually uses it, the project is either a scam or simply failed to attract the community towards it.
Are free cryptocurrency giveaways and Initial Coin Offering (ICO) the same thing?
Free cryptocurrency distributions and initial coin offering (ICO) are two different concepts, although they both include new cryptocurrency projects. While free cryptocurrency giveaways do not require any investment from participants, an initial coin offering (ICO) is a method of crowdfunding.
In an initial coin offering (ICO), the project team conducts a token sale to raise funds from investors. ICOs began to become popular in 2014, when Ethereum conducted crowdfunding to support its development. In 2017, the cryptocurrency space saw a boom in ICOs, with hundreds of new projects adopting this method. If you want to learn more about ICOs, please see What is an Initial Coin Offering (ICO)?
Types of free distributions
As we have seen, there are different ways to conduct free cryptocurrency distributions. Aside from the standard free distributions that simply transfer cryptocurrencies to several wallets, we have some other types. Common examples include free bonus distributions, exclusive free distributions, and free distributions for token holders.
Free bonus distributions
Free bounty distributions require users to complete certain tasks, such as sharing a post about the project on Twitter, joining the project's official Telegram group, or creating a post and mentioning some friends in it on Instagram. To claim your free bonus distributions, you will likely be asked to fill out a form with your wallet address and provide proof that you have completed the tasks.
Exclusive free distributions
Exclusive free distributions only send cryptocurrencies to specific wallets. Recipients usually have a previous history with the project, such as being an active member of the community or an early supporter of the project.
In September 2020, decentralized exchange (DEX) platform Uniswap distributed 400 UNI for free to every wallet that interacted with its protocol before a certain date. The governance token gives its owners the right to vote on decisions regarding the future development of the project.
Free distributions for token holders
Free Token Holder Distribution distributes free tokens to those who have a certain amount of cryptocurrencies in their wallets. The project team usually takes a snapshot of users' cryptocurrency balances at a specific date and time. If the wallet balance meets the minimum requirements, recipients can claim free tokens based on their balances at the time of the snapshot.
Many new projects are making free token distributions to Bitcoin (BTC), Ethereum (ETH) or Binance smart chain wallet holders, as they represent the largest communities in this space. For example, Stellar Lumens (XLM) distributed 3 billion XLM for free to BTC holders in 2016, and the free distributions were exclusive to users in the Bitcoin network.
How to claim free distributions?
As mentioned earlier, the process will vary from project to project. But the most important thing you need to claim your free handouts is a cryptocurrency wallet. MetaMask is a popular and easy-to-use cryptocurrency wallet. After that, you can check whether your wallet has received free tokens or not. If the wallet has not received any tokens, you will likely have to interact with the website to claim the free handouts.
How to avoid freebie scams?
It can be difficult to know whether free giveaways are legitimate or a scam. You should always do your own research before signing up for any free giveaways, especially when you are asked to link your wallet to a website. Sometimes, scammers distribute free tokens into several wallets, but when you try to transfer these tokens to another cryptocurrency exchange or wallet, your wallet will be depleted.
In other cases, scammers will advertise fake free giveaways that trigger a visit to a phishing website. They will trick you into linking your wallet to a website that is very similar to the original. Once you link your wallet and sign a transaction, they will receive other tokens from your wallet. This often happens with fake accounts on Twitter and Telegram that look very similar to official accounts.
Some freebie scams involve asking you to send cryptocurrencies to an unknown wallet address to unlock your free tokens in return. Legitimate free distributions will never ask for your money or your seed phrase. Be careful when receiving emails or direct messages for free giveaways.
To avoid being scammed, be sure to check the project's official website and social media channels. Bookmark the official links and double check whether the site is actually doing freebies or not. If you don't know anything about the project, you should do more research to find out what the cryptocurrency community is saying about this project. If you cannot find enough information, it is better to ignore these free distributions.
For added protection, you can set up a new wallet and email address dedicated to receiving free giveaways only. This can ensure that the funds in your personal wallet are safe from phishing attempts related to free giveaways. Most importantly, never share your private keys with anyone.
Concluding thoughts
Free distributions of digital currencies make projects stand out and gain more popularity in the industry. It can also be a good way for cryptocurrency enthusiasts to grow their portfolios by owning rising tokens. However, free giveaways are more likely to be fraudulent than legitimate ones, so be careful and make sure you do your research before participating in them.