Curious whether Bitcoin or gold is the better bet? We break down the pros, cons, and what really sets them apart so you can decide what suits you best.
Keep reading
Bitcoin versus gold: it's like asking whether you prefer chocolate or vanilla ice cream, except the stakes feel a bit higher when we're talking about assets that people use to preserve wealth.
This comparison has become one of the most fascinating conversations in modern finance. You'll find everyone from your tech-savvy nephew to seasoned Wall Street veterans weighing in on this debate. The reason it captures so much attention? Both assets serve similar purposes for many people in that they're often viewed as alternatives to traditional currencies and ways to maintain value over time.
Media outlets regularly feature this matchup, and it's not hard to see why. We're essentially watching a clash between the old guard and the new kid on the block, between something you can hold in your hands and something that exists purely in the digital realm.
Similarities between Bitcoin and gold
Before we dive into their differences, let's talk about what these two have in common, and honestly, it's more than you might think.
Both Bitcoin and gold operate like that friend who marches to the beat of their own drum. They don't need permission from central banks or governments to exist. Gold has been doing its own thing for thousands of years, while Bitcoin has been independently chugging along since 2009, free from the control of any single authority.
Here's where it gets interesting: both are naturally scarce. There's only so much gold buried in the earth, and Bitcoin has a built-in limit of 21 million coins. It's like having a limited-edition collectible - the scarcity is part of what makes people pay attention.
This is where the "digital gold" nickname comes from. People started calling Bitcoin this because, like gold, it's rare, it's not controlled by governments, and many view it as a way to store value. It could be gold's tech-savvy cousin who traded in the physical form for a digital existence.
Both assets have also been described as stores of value, meaning people turn to them when they want to preserve their purchasing power over time. The idea is that what you put in today will still hold meaningful value tomorrow.
Differences in utility and form
Gold has been humanity's companion for millennia. You can touch it, wear it, and even use it in your smartphone (yes, there's actually gold in there!). Industries rely on gold for everything from electronics to medical equipment. Central banks stack it in their vaults like a financial security blanket, and jewellers craft it into pieces that mark life's special moments.
Bitcoin, on the other hand, exists purely in the digital world. You can't hold it, but you can send it across the globe faster than you can say "blockchain." It's supported by a network of computers that work together to verify transactions, creating a system that operates 24/7 without taking coffee breaks.
Think of gold as the sturdy oak tree: deeply rooted, physically present, and serving multiple purposes. Bitcoin is more like the wind: you can't see it, but you can feel its effects, and it moves with incredible speed and efficiency.
Historical trends and market behaviour
Let’s take a look at how these assets have behaved over time.
Gold has earned a reputation as the steady friend who shows up when times get tough. During economic uncertainty, gold often sees increased interest as people seek stability.
Bitcoin, meanwhile, is known for its dramatic personality. It can swing from exhilarating highs to stomach-dropping lows, sometimes within the same week. This volatility means Bitcoin can experience significant price movements: some days it feels like it's reaching for the stars, other days it seems to be taking a scenic route through the valleys.
These different personalities mean they each attract different types of attention and serve different roles in people's financial lives.
Reactions to global events
Nothing reveals character quite like a crisis, and both Bitcoin and gold have had their share of testing moments.
During the 2008 financial crisis, gold saw increased demand as people sought alternatives to traditional investments. When the COVID-19 pandemic hit in 2020, gold initially attracted attention as uncertainty gripped global markets.
Bitcoin has had its own unique responses to global events. During certain periods of economic uncertainty, some have turned to Bitcoin as an alternative. However, during market stress, Bitcoin has sometimes moved in unexpected directions, reminding everyone that this digital asset often writes its own rules.
Inflationary periods have also provided interesting case studies. Gold has historically been viewed as a hedge against inflation, while Bitcoin's response has been more varied and unpredictable. The Bitcoin vs gold debate is essentially watching two different strategies play out in real-time.
Adoption and access
The way people access these assets tells its own story about our changing world.
Bitcoin has recently been making headlines with the introduction of exchange-traded funds (ETFs), making it easier for traditional investors to gain exposure without having to figure out digital wallets and private keys.
The digital nature of Bitcoin means you can access it from anywhere with an internet connection. No need to worry about storage space or security guards - just remember your password (and any other safeguards you have in place).
Gold, meanwhile, has the advantage of thousands of years of infrastructure. Banks have vaults, dealers have established networks, and there's a whole industry built around buying, selling, and storing the precious metal.
Risks and transparency
Every asset comes with its own set of considerations, and both Bitcoin and gold have their unique profiles.
Bitcoin operates in a world where regulations are still being written. There are also cybersecurity considerations, as digital assets exist in a realm where hackers and technical glitches can pose risks.
Gold has more traditional concerns. Storage and insurance can be costly, and there's always the physical risk of theft or damage. You need to think about where to keep it safe and how to protect it.
Both assets have their own transparency characteristics. Bitcoin transactions are recorded on a public ledger that anyone can view, while gold transactions often happen through traditional channels with varying levels of public visibility.
Perspectives from experts
The financial world is full of smart people with different opinions, and this topic certainly brings out diverse viewpoints.
Institutions like BlackRock have entered the Bitcoin space with ETF offerings, suggesting growing institutional interest. While the CME Group, which offers futures contracts for both assets, has observed how institutional trading has evolved for each.
These expert perspectives form part of a broader ongoing conversation about how these assets might fit into the modern financial landscape.
What's fascinating is how these viewpoints continue to evolve as both assets mature and as global economic conditions change.
Framing the question: what role might each play?
Rather than asking which is "better," perhaps the more interesting question is: what role might each play in different contexts?
Consider what qualities matter most to you in a store of value. Are you drawn to the tangible nature of physical assets, or does the digital convenience appeal to you? How do you feel about volatility: is it something you can live with, or do you prefer steadier movements?
The answer often depends on individual circumstances, goals, and comfort levels. Some people find comfort in gold's long history, while others are excited by Bitcoin's technological innovation. Some appreciate gold's physical nature, while others value Bitcoin's portability and accessibility.
These aren't questions with universal answers, they're personal considerations that vary from person to person.
Final thoughts
The Bitcoin versus gold discussion continues to evolve as both assets mature and as our understanding of their roles in modern finance deepens. Rather than viewing this as a winner-take-all scenario, perhaps the most interesting approach is to understand how each asset's unique characteristics might serve different purposes in our increasingly complex financial world.
What matters most is understanding your own needs, risk tolerance, and goals before making any financial decisions. After all, the best asset is the one that aligns with your personal circumstances and financial objectives.
NEWS AND UPDATES
LATEST ARTICLE
It's no secret that trading any financial market is hard work. Traders need to keep calm, level-headed, and observant at all times while staying on top of the market's ever-changing movements.
While making mistakes is part of the game, we've outlined 5 of the biggest common mistakes you can avoid while you navigate the often turbulent waters of any trading system and technical analysis.
What is technical analysis?
Technical analysis (TA) is one of the most popular methods for analyzing financial markets. At its core, it uses previous price action and volume data to predict future market behavior by identifying trends and favorable trading opportunities.
It can be applied to the chart patterns of any kind of market, including stocks, forex, commodities, and cryptocurrencies. While the basics are not too difficult to understand it takes a lot of practice to become an expert technical analyst.
This form of analysis typically looks at historical price action, while fundamental analysis (FA) looks at multiple factors affecting the price of an asset.
5 common mistakes made when it comes to using technical analysis
- Know when to cut your losses
No matter how big or small, always prioritize protecting your investment. In the world of trading and investing, this is non-negotiable if you want to see any returns. A great way to approach trading is to start out with the following mindset: you're not here to win, you're here not to lose.
Start with small positions, set up a stop-loss, and know when to cut your losses.
2. Don't ignore extreme market conditions
While the markets are typically governed by supply and demand, there are cases where extreme conditions like black swan events can throw your carefully curated technical analysis to the curb. Sometimes emotion and mass psychology can cause periods of extreme market conditions, and you will need to adjust your trading strategy accordingly.
If you make decisions based solely on readings from technical tools, you run the risk of losing money, especially during black swan events when it can be tough to understand what's happening. Keep in mind that market conditions can change rapidly and without warning, so it's always important to consider other factors before making any decisions and risking real funds.
3. Avoid revenge trading
Revenge trading is a term used to describe when a trader tries to immediately recover a significant loss through making alternative trades. Infringing the golden rule of not making trades based off emotions, revenge trading is a no-no.
Harness your inner zen and attempt to stay calm through both big and small mishaps. Sticking to your trading plan will be the best thing you can do, and make adjustments as need be based off of logical thinking and an analytical approach.
Immediate trading after a severe loss often leads to more losses. Therefore, some traders take a break from trading altogether for a while after they lose big. By taking this breather, they can come back with fresh mindsets and restart their trading journey.
4. Remind yourself (constantly) that TA is a game of probabilities
Technical analysis is all about probabilities and not absolutes. This means that no matter what technical approach you’re using, there’s never a 100% guarantee that the market will behave as you expect. Even if your analysis suggests that there’s a very high probability of the market moving up or down, it's still not set in stone.
As you're getting your trading strategies together, there's one aspect you always need to keep in mind: don't think the market will go how your analysis predicts. This is a mistake even experienced traders make, and it leads to bad decisions like betting too much money on one outcome instead of spreading it out. That puts you at risk of losing a lot financially if things don't go your way.
5. Don't blindly follow anyone's trading strategies
A great way to learn how to trade the financial markets is by observing experienced technical analysts and traders. However, in order to master your own skills you will need to establish what your own strengths are and how to leverage them.
Observing other traders doesn't present a fool-proof trading strategy as something that works for one trader might not work for another. With countless ways to make money off of the markets, find your own trading style that is best suited to you.
Initially, you might get lucky by making trades based off of another person's opinion. However, if you continue down this road without comprehending why they made that choice, it will only lead to detrimental consequences in the future.
Learning from others is key, but it is more important that you think for yourself and agree with the trade before moving forward. Do not let anyone else make decisions for you blindly, no matter their experience level.
In conclusion
While trading isn't easy and there is certainly no quick fix to success, the above are some helpful starting points to consider when entering the world of technical analysis.
Remember that it takes practice, and while approaching trading with a longer-term mindset is a great way to start, ideally, you want to build habits that allow you to be in control of your trading decisions and avoid common mistakes.
Constantly manage your risks and learn from your mistakes when you make them in order to capitalize on your strengths and improve. This advice serves both professional traders and newbies.
With growing pressure to "have it all figured out" consider that since the start of their careers, millennials have seen slower economic growth than any other generation in the United States' history. Living through two recessions wreaks havoc on not only one's career path but finance success too.
Below we've listed the 5 golden financial tips that every millennial should know when it comes to managing their personal finance. From things you can do now to planning for the future, these simple and actionable steps will assist in making your financial situation that much more of a financial success.
1. Be prepared for hard times: emergency fund edition
While none of us enjoy emergencies, they are an unfortunate and inescapable part of reality. The best way to deal with them is by being prepared, and this means putting in the work ahead of time. By having a plan in place, you can minimize the stress and damage that these situations cause.
While rule number 1 of financial health is getting yourself out of debt, rule number two is creating an emergency fund. This is considered to be six months' worth of living expenses saved in a savings account so should something go wrong - from unemployment to medical bills to car or household repairs - this doesn't take a negative toll on your personal finance.
While this is not something one can typically create overnight, consider your budget and how much you can allocate to your emergency fund each month. Then start putting the money aside, even if it takes you a year or two to get there.
Consider if something went wrong and you needed access to cash fast, would you instead use the money from your emergency fund, or take out high-interest debt in the form of a credit card or personal loan? Note that taking funds from your retirement savings was not an option, and nor should it ever be.
In your path to financial success, always have a plan to fall back on.
2. Living large is fun, but can your personal finance really afford it?
Before making big money decisions, you must ask yourself difficult questions.
Before you upgrade your car, consider whether you can really afford it. Aside from the car, there is also insurance and gas and services, can your budget afford to take these on?
Or when moving apartments, is the upgrade totally necessary, and can your budget handle it? As millennials, we love to live the high life, but just make sure that your budget isn't taking strain and that everything you buy is well within your means.
3. It's ok to say no sometimes (and avoid credit card debt)
Celebrating with friends and family is a big part of life, but you don't have to say yes to everything, especially if these celebrations are taking a toll on your personal finances.
When planned ahead of time, one can usually budget for these, but last-minute surprise events come with added pressure. Also, consider that all these functions and events add up, don't get caught off guard "living in the moment" only for your finances (and financial goals) to suffer later.
Create a budget that outlines exactly what your financial obligations are to establish what you can spend on entertainment and socializing each month. Then, and most importantly, stick to it. If a last-minute event falls outside of this budget, you're well within your means to politely decline.
Having fun with friends and family is special, but taking a financial knock will only hurt you in the long run. Prioritize your social calendar and don't live beyond your means.
4. Watch out for direct debits (except to your savings account)
Living in the digital age we find ourselves in now is designed to be stress-free and seamless. Companies are making payments effortless through automatic payments, aka direct debits, but are you entirely aware of all the payments going off your checking account each month? It's very easy to lose track of your expenses when they're all automated.
When building your budget make sure you go through old statements to make sure that no direct debits are going off your account for services that you no longer use. Ideally, do this quarterly to ensure that you're always on top of your expenses.
The most NB direct debits should be to your emergency fund, savings account, and any investments (including your retirement fund). These are not considered expenses but are deposits into your future.
5. Don't be fooled into thinking that retirement is light years away
Your retirement is closer than you think, don't get caught out. Many millennials have seen their parents and grandparents struggle with no retirement planning, break the cycle and make sure that you are prepared with a plan and a solid retirement account.
Don't wait until you're old, start preparing now and reap the rewards when you finally get there. A great way to prepare is to start putting money into long-term investments with compounded interest. These types of accounts ensure that your money works for you. Also, look to passive income options to help you build your retirement account.
Alleviate some of the grey hairs by getting your financial planning started today.
Closing thoughts on achieving financial success
While the economic cycles haven't been good to us, we are resilient and strong and will rise above it. Consider these 5 golden financial tips and build a financial strategy to ensure that you're covered for everything from an emergency to retirement. The first steps to taking the reigns of your personal finance are to write out a monthly budget, allocate funds as necessary, and then stick to your spending frameworks.
If in doubt, contact a financial advisor who can assist with furthering your financial education and provide more in-depth money tips.
In the age of neobanking, it seems counter-intuitive to be locked into a long-term relationship with an establishment that hasn’t changed in 300 years. With outdated processes and tedious hoops to jump through, it’s high time you said goodbye to the traditional financial institution and treated your finances with the love and respect they deserve.
From an outdated bank to an even more outdated credit union, you don't need to settle for financial institutions that make the rules and take your money. It's 2022, you have options. And we know, the process to switch from your current bank is tedious, but with the technological advancements of today, that's a thing of the past.
You deserve better from your financial institution
Knowing you deserve better is the first step toward claiming back your power. It’s time to say goodbye to high, complicated fee structures and hello to transparency, minimal fees, and knowing exactly where your money goes.
As the world rapidly transitions into a more digital space, why keep the management of your finances stuck in the dark age? Fintechs are making big strides in providing the masses with new-age financial services with faster processing times and more transparent fees. Your financial livelihood deserves better.
Neobanking vs traditional banks
Let’s take a moment to define neobanking. Neo comes from the Greek word “new”, literally meaning “new bank”. These financial technology companies (fintechs) offer users access to financial services through online digital platforms, an online bank of sorts. While not all fintechs are created equal, the majority require special licensing and provide something similar to a checking account with web and mobile services.
A traditional financial institution refers to the age-old establishment that in all likelihood is the same bank that our grandparents used in their days. Innovation in the traditional bank sector has been stagnant over the last several decades, and little has changed in these money-making corporations. They also tend to have deep political, financial, and social roots in their countries of operation. Not to mention poor customer service.
- Neobanking companies are largely like a digital online baking providers, whereas traditional banks have a physical presence alongside online banking services.
- Fintechs offer standard services such as checking and savings accounts, money transfer and payment services, low to no overdraft fees and some financial education tools (budgeting tools, etc). On the other hand, traditional credit unions present a much wider selection of options like lines of credit, financial advisors, credit cards, etc.
- While all traditional banks are fully licensed and chartered, many fintechs do own different as significant licenses such as EMI licenses. In some cases, in order to insure their products, neobanks do choose to partner with a primary bank.
- Many banks focus more on developing strong, lasting relationships while neobanks typically provide more flexible accounts than just a simple bank account, which require less paperwork and can be used worldwide.
- Online banks tend to overwhelm clients with a variety of complicated fees while neobanks charge much lower fees for their services, including for most : no monthly maintenance fee.
- While banks provide you with a face to face agent, fintechs do not, however they still provide quality customer service representatives ready to help you online with anything you might need. In short both boast different yet great excellent customer service.
Fintech do provides a new-age approach with fewer fees and more transparency, but with all, if not most, of the bells and whistles that your current banking platform provides.
The poundtoken is a blockchain-based stablecoin pegged to the British pound sterling (GBP). With the rising interest in stablecoins, the poundtoken presents the perfect solution for UK-based crypto enthusiasts. As one of the first regulated GBP-based stablecoins, the poundtoken has an impressive and transparent means of ensuring that it is appropriately backed.
What is poundtoken (GBPT)?
As mentioned above, the poundtoken is a stablecoin pegged to the British pound sterling (GBP), meaning that the poundtoken price will always be equivalent to that of ￡1. The coin is issued by Blackfridge SC Limited, a fintech platform licensed and regulated by the Isle of Man Financial Services Authority. GBPT is the first regulated stablecoin in the British Isles.
Stablecoins are required to hold reserves for each coin in circulation, and poundtoken is no exception. Blackfridge, based in the Isle of Man, holds 100% fiat reserves in segregated accounts in a European bank, and undergoes monthly proof of reserve attestations and annual financial audits by KPMG.
With 2.45 million tokens as the maximum supply, poundtoken is an excellent option when looking for a GBP-backed stablecoin as it allows for direct GBP access to digital asset exchanges and DeFi (decentralised finance) protocols, while also ensuring frictionless real-time settlements.
Who created poundtoken?
Poundtoken was created by Alan Sun, Michael Crosbie and Nicholas Maybin as a solution to price volatility in the cryptocurrency space. Launched on July 11, 2022, the British Isles regulated GBPT was designed to merge the benefits of blockchain technology and smart contracts with the strengths of a regulated financial product.
Through its fully vetted audit system, the stablecoin ensures that investors are always in the know regarding its backing and can rest assured knowing that the stablecoin is backed appropriately. This comes as a breath of fresh air when compared to other failed stablecoin projects that have recently collapsed and tainted the crypto image for investors and law enforcement agencies alike.
How does poundtoken work?
For every GBPT released into circulation, ￡1 is held in safeguarded segregated accounts held in a European bank. These funds undergo monthly proof of reserve attestations as well as annual financial audits, both conducted by KPMG.
Poundtoken.io is built on the Ethereum network, while GBPT utilizes the ERC-20 token standard. The stablecoin then uses smart contracts to facilitate the purchase, storage, transaction and transparent collateralisation of the stablecoin.
How does poundtoken comply with strict British financial regulations?
As the first British-regulated stablecoin, poundtoken has attracted much attention from investors in the digital asset markets for its strict auditing process, entirely transparent to the public. Since complying with the rigorous British financial regulation requirements, holders can rest assured knowing that they can redeem their stablecoin for GBP at any given time.
Isle of Man Financial Services Authority
The issuing company, Blackfridge is fully regulated and licensed by the IOMFSA. Through this licensing, Blackfridge is required to hold GBP equal to the value of the tokens issued at all times.
How Can I Buy GBPT?
Users looking to accumulate GBPT can do so conveniently from their Tap account. Simply register an account, and you'll be able to onboard several crypto and fiat currencies. From there you can buy, trade or sell at excellent rates as well as store the currencies in a secure location.
Tap allows users to deposit several currencies, for example, Bitcoin or USD, and trade them for alternative cryptocurrencies. Through the secure platform and integrated technology, users are able to seamlessly conduct crypto trading at the best market prices available.
Since the Metaverse x GameFi project launched in early 2022, GensoKishi Metaverse has taken the cryptosphere by storm, already listed on several top exchanges. The MV token pairs with another token to power GensoKishi Online, the blockchain-based play-to-earn (P2E) game that allows users to create, buy and sell unique characters, weapons and maps. The blockchain-based innovation has leveraged the already existing MMORPG world of Elemental Knights.
What is the GensoKishi Metaverse?
GensoKishi Online, Genso for short, is the blockchain-based play-to-earn reincarnation of the Nintendo Switch and Playstation game, Elemental Knights. The game boasts an impressive 13-year history with 8 million downloads and simultaneously connects users using a range of devices around the world through its fully-functioning 3D metaverse.
While the original game allowed users to create their own skins, characters, maps, and weapons, with the addition of blockchain technology all these attributes are now registered as NFTs. This allows for the buying, selling, and trading of unique elements.
The massively multiplayer online role-playing game (MMORPG) centers around players roaming freely through the immersive fantasy world, immersing themselves in quests with other participants. Players can bring their own characters and monsters to life through the creation process, while investors are able to purchase digital land and construct buildings.
Genso is groundbreaking in its incorporation of MMORPG elements and NFTs, giving players unprecedented control over their virtual assets. This revolutionary fantasy game enables gamers to take ownership of the items they have created or earned through skillful participation, making for a uniquely immersive experience.
Who created the GensoKishi Metaverse platform?
The development team behind the project has a brilliant track record in the existing MMORPG world having developed online games and prominent MMORPG titles for over two decades. Maxi Kuan is the CEO behind GensoKishi Metaverse, having previously been a Japanese representative for the Chinese blockchain media company Blockcast.it and ran a blockchain-focused startup consultancy in Japan.
World-renowned video game composer Tokuhiko Uwabo and former NHN PlayArt CEO Masaki Kato have since joined the GensoKishi Metaverse team as advisors. And in February 2022, the platform held an NFT auction which lead to SoulZ, a Japanese NFT collection, signing on as a partner and creating the first space within the metaverse.
How does the GensoKishi Metaverse work?
Through the game, players are able to create and monetize unique in-game items such as characters, weapons, skins, and maps. Expressed as NFTs, this allows for the tracking of ownership and free trade of these elements, and as such create an expansive digital in-game economy within the GensoKishi Metaverse.
Thus, any content players create or acquire belong to them and can be traded with other gamers, leading to a commerce-oriented gaming experience.
Players can also purchase plots of land on which they can build a wide variety of structures, from spaces designed for the battling of monsters to social interaction areas. As the owner, one can monetize this digital property by charging admittance fees to visitors.
Additionally, individuals and teams have the opportunity to earn rewards by completing quests. As mentioned earlier, the GensoKishi Metaverse MV tokens work alongside another cryptocurrency, ROND, to fuel the gaming experience.
- MV token: The GensoKishi Metaverse Token (MV) is the main governing token of GensoKishi Online and empowers holders to cast their vote on proposed alterations to the game. By purchasing or staking MV tokens, players can not only receive ROND rewards but also be granted privileges such as constructing new in-game worlds, costumes, and other content.
- ROND: The GensoKishi Metaverse is powered by ROND, the primary in-game cryptocurrency. This currency can be subdivided into miniRONDs to use when making payments or transactions within the game. From going to different worlds and upgrading weapons and costumes, everything requires miniRONDs as payment.
Additionally, you also have the chance to earn extra miniRONDs by either lending out acquired items to other players or conquering various obstacles set forth for you.
MiniRONDS can then be converted back to ROND and traded on secondary-market exchanges.
GensoKishi Online is built on the Polygon (MATIC) blockchain, while the MV and ROND tokens are ERC-20 based. In order to play, players will need to connect a crypto wallet and create an account on the platform. They will then be able to customize their new avatar and begin completing quests.
What is MV?
While ROND acts as the GensoKishi Metaverse in-game currency, the MV token acts as the governance token primarily used outside of the game. The governance token provides users with voting rights on future developments to the platform, while also providing discounts on in-game items such as land, cosplay equipment, monsters, and non-player characters (NCPs).
The GensoKishi Metaverse platform is currently developing staking capabilities for the MV token, which would allow stakers to earn ROND proportionately to the amount staked and length of time.
How can I buy the GensoKishi Metaverse token?
Grow your digital currencies portfolio or simply gain access to the game with ease by buying MV tokens through the Tap app. The fully regulated platform offers a simple and reliable crypto trading experience, allowing users to securely buy, sell, trade, and hold a wide range of digital assets including the GensoKishi Metaverse token.
Tap makes it easy for users to purchase their MV tokens, whether using crypto or fiat currency. After you store them securely in your integrated crypto wallet, you’re ready to transfer the tokens over to Genso and start playing.
Buy / sell GensoKishi Metaverse tokens or simply check the price of GensoKishi Metaverse by downloading the app and completing the quick account verification process.
You might be familiar with buying and selling cryptocurrencies, but have you tapped into the world of crypto airdrops? Airdrops are essentially marketing strategies that are designed to build awareness and interest in a blockchain-based crypto project. As we set out to provide more information and explain what these are we will also touch on the powerful benefits that airdrops can bring to investors.
What Is A Crypto Airdrop?
A crypto airdrop is when a project gives out its native coins for free as a marketing tool to generate hype, grow its network and gain wider adoption, essentially providing free money. On occasion, the coins require small tasks such as following social media pages, and other times they are entirely free of engagements.
These coins are then transferred to current or potential users' wallets for free in the hopes of drawing in more business. Airdrops rose to fame in the ICO boom of 2017 and are still used today. While handed out for free, airdrops can increase in value over time, becoming potentially lucrative to the receivers.
Through distributing coins, projects increase their number of holders (a positive metric for up and coming projects) as well as increase their decentralisation (due to increased token ownership).
How Do Cryptocurrency Airdrops Work?
An airdrop is typically outlined in a project's roadmap and will commence once certain criteria have been met. While airdrops can range from project to project, they typically involve small amounts of cryptocurrencies, often built on Ethereum or other smart chain, being distributed to several wallets.
These coins are usually distributed for free, however, on occasion users will need to perform small tasks related to marketing (like engaging on social media or subscribing to a newsletter) or hold a certain number of coins in their wallet. A successful airdrop will see its recipients promoting the project and generating hype before being listed on an exchange.
What Is The Difference Between An ICO And An Airdrop?
While both are related to new digital currency projects, the major difference between the two is that airdrops are when tokens are distributed for free while ICOs require participants to purchase the project's tokens with an outlined purchase price. ICOs are a source of crowdfunding while airdrops are marketing strategies.
What Are The Different Types Of Airdrops?
As mentioned above there are several different types of airdrops; exclusive, bounty and holder.
Exclusive Airdrops
These airdrops are centered around active members of the community or early adopters. In exclusive airdrops, coins are only sent to designated wallets. Uniswap is a classic example of this, distributing 400 UNI to each wallet that had engaged in the platform before a certain date. The governance token allowed holders to vote on the project's future developments.
Bounty Airdrops
Bounty airdrops are when users need to engage in the platform in order to claim their tokens. This typically involves activities related to social media (liking a post, joining a Telegram channel, tagging friends, etc.) and the project might ask to see proof before distributing the coins.
Holder Airdrops
This type of airdrop is for users already holding the project's token to thank them for their loyalty. Typically the project's team will take a snapshot of the wallet balances at a certain time and reward all the wallets that meet the minimum criteria.
When creating holder airdrops, projects might use other more established cryptocurrencies in the hopes of tapping into their networks. For example, in 2016 Stellar (XLM) airdropped 3 billion XLM to users on the Bitcoin network, granting them free access to the Stellar network.
The Downside To Airdrops
Naturally, there are ill actors out there who take advantage and have created airdrop scams. These scams might involve a "project" airdropping tokens into a wallet but when the holder attempts to move these tokens their wallet is drained.
Another example of an airdrop scam is a project enticing you to sign up for the airdrop by connecting your wallet only to take your wallet details and gain access to your account. These are typically conducted through websites and fake Twitter and Telegram accounts that look very similar to the real deal but are in fact phishing scams.
It's important to DYOR ( do your own research ) when engaging in an airdrop, and know that a project will never require you to send funds in order to "unlock" tokens or require you to provide a seed phrase or private key.
Another downside to airdrops is that projects can create an incorrect impression of growth. If thousands of coins are distributed to thousands of wallets this might cause the project to look busier and more adopted than it actually is. When judging a project by this metric ensure that it has an active trading volume that reflects the number of wallet holders, if there are plenty holders and minimal activity consider this a big red flag.