Here is a balanced look at Stellar’s airdrop of the XLM token on Blockchain Wallet. Is it a ploy? Is it a generous gift? Is it both at the same time?
Airdropping is a marketing technique through which an organization aims to expand its community and currency adoption. Handing out free money sounds like a good trick. However, the ethics of airdrops are more complex than they may seem.
For a currency to have value, it needs to be used. So dropping it into thousands or millions people’s wallets, although at a great expense, may be worth it. At the same time, the brand is being solidified and reaches a wide public. On the surface, everyone makes gains.
CoinDesk expresses that “the danger that scams could set back the societal progress that cryptocurrencies and blockchain applications offer in fostering low-friction, peer-to-peer economic opportunity.” At the same time, the spreading of a currency in such a quick and effective way inevitably boosts its utility and adoption:
“A currency is quintessentially a network product. More than anything else, its “utility” is a direct function of the size of its network. And while that network will surely fail if the product’s functionality isn’t maintained and reinforced on an ongoing basis, the critical mass that’s needed to achieve real network effects is dependent on mass communication of the idea.”
The most recent Blockchain Wallet’s Stellar airdrop has provoked an array of responses.
The company is giving away $125 million in Stellar lumens (XLM), amounting to half a billion tokens, to Blockchain wallet holders who sign up for the airdrop. Blockchain CEO Peter Smith, said the Stellar airdrop would allow users to “test, try, trade, and transact with new, trusted cryptoassets in a safe and easy way.”
Marco Santori, president and chief legal officer at Blockchain, said:
“We think airdrops have the power to decentralize networks without the investment risks inherent in ICOs and the complexity inherent in mining. Using Blockchain Airdrops, crypto creators can supercharge network effects and crypto users can try out new tokens for free. It’s a win-win for the ecosystem.”
However, there is a catch. this Blockchain users need to verify their identity before receiving their free XLM. This is done in order to only allow each user to claim their share once, but at the same time removes the principle of privacy from what was at first just a Bitcoin-only wallet.
Bitcoin-guru Andreas Antonopoulos even referred to the airdrop “privacy-destroying honeypot” on an episode of Let’s Talk Bitcoin.
Furthermore, according to CoinDesk, many in the crypto-communities saw this as –
“a scammy way for Blockchain to expand wallet usage and complained that users would have to submit to the company’s know-your-customer (KYC) procedures, creating a big, marketable data pool of personalized information for the company.”
The move has been criticized as a shameless self-empowering manoeuvre of the wallet company. Stellar may not even be the main profiter of the airdrop. When given free goods, people can easily just trade them for whatever seems more worth to them.
Auroracoin’s airdrop story from 2014 may ring a bell. After a profound yet brief success, the coin crashed a few months after its airdrop, as all the recipients cashed out their profits.
Nonetheless, airdrops remain a positive experience for most users, which creates more awareness for the product and promotes mass adoption. It is a considerate marketing expense by the company, which hopes to share a successful service.
It takes some self-discipline to not get excited and launch yourself into receiving some free crypto. What if the price rises, and I could’ve been a millionaire? The problem is not accepting the offering, it is just important to keep in mind the implications involved. If the event does not clash with your idea of what is important in a cryptocurrency, go for it. Otherwise, don’t let greed get the better of you!
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