If you have been following us at Something Decent (along with all the usual crypto currency websites) over the past few days you have probably noticed the mass influx of ‘airdropped’ tokens being issued on both the Ethereum and Waves platforms, and probably have an opinion as to whether the whole concept is a worthwhile one.
As eBTC makes a reclaim for some credibility by apparently ridding the weak link from their dev team (Satoshi21) and remaking their website, eLTC2 & eLTC3 become pretty much worthless, leaving people with a mass of coins which would cost more in transaction fees than they are actually worth.
While all that is going on, ELTCOIN, which started as the original eLTC, then rebranded, is gearing up to conduct a small ICO of remaining tokens to compliment their initial airdrop. By doing this they hope to be able to raise the funds and interest to skip smaller exchanges and head straight into the big time with an exchange like Poloniex or Bittrex.
Traditionally new crypto startups would issue an ICO event (initial coin offering), during which the general public would be able to buy into the new startup company before it hits an exchange. This model has lead to a number of people being ripped off as the devs disappear into the sunset with their newly acquired crypto, shortly after completing the sale.
Obviously, when these scam coins are exposed the development team get exposed with them but, in an industry which is seriously hinged on privacy, comeuppance for the fraudsters never seems to actually be materialised.
With the number of crypto scams increasing it is no wonder China decided to put a blanket ban on ICO sales a few weeks back while it figures out a way of regulating the industry.
Taking all of this into account I can’t help but to think that the strategy utilised by the new ELTCOIN could well be one which we see used more frequently. By allowing a large percentage of your token to be issued for free, via an airdrop, you get a large number of people on board with the project, without any financial risk for themselves.
In my opinion this is one of few ways that you can gain the trust of the community from the get go. Using ELTCOIN as the case study again, when their ICO goes live there is already going to be a significant number of people with a decent amount of tokens, all of whom haven’t had to invest a penny. They have simply been rewarded for being an early adopter of the platform.
Now, I’m not saying this method prevents anything from being a scam, I mean, there’s nothing to stop them from running when the ICO is finished, but it does go someway to providing a bit of ease of mind for investors who also received their airdrop. I mean, why go the long way round to give out a load of free coins and then nick a really insignificant amount?
Should their ICO go well they will raise the funds to get listed on a big exchange which will see all early adopters be rewarded for their faith in the project.
Personally I wouldn’t be surprised if this method of distribution is used more frequently should ELTCOIN make a success of their ICO. With China being very much on the fence with the whole industry and many people becoming more and more doubtful of ICOs could we see airdrops becoming a regular occurrence in the cryptoverse? I think so.