Complete guide to cryptocurrency airdrops: from how they work to safe receipt methods

What Are Free Cryptocurrency and NFT Airdrops

Airdrops are marketing strategies where project companies distribute cryptocurrencies or NFTs for free to users who meet certain criteria. Recipients can acquire assets without any financial burden, while the distributing side can increase project awareness and expand their user base—creating a mutually beneficial system.

Between 2024 and 2025, large-scale airdrops related to Ethereum layer-2 chains and restaking projects occurred one after another. During this period, billions of dollars worth of crypto assets were circulated through airdrops, significantly impacting the overall market.

Rather than being mere transient promotions, airdrops are increasingly positioned as part of growth strategies and initial user rewards, with a growing focus on them as an investment tactic.

Background and Purpose of Airdrops

Projects and companies execute airdrops for multiple managerial and marketing objectives.

Increasing Awareness and Market Penetration
New crypto and NFT projects need to rapidly expand recognition in the market. Airdrops allow direct outreach to targeted audiences, significantly reducing traditional advertising costs while effectively boosting awareness.

Expanding User Base
Distributing assets to many people helps quickly build an initial user base, leading to increased usage and community formation.

Ensuring Market Liquidity
Newly issued currencies or tokens often have limited holders initially, resulting in low liquidity. Wide-scale airdrops distribute tokens across many wallets, improving overall market liquidity and making trading easier.

Fair Initial Distribution of New Currencies
When a new currency is forked from an existing one, airdrops serve as a fair initial distribution mechanism to existing holders. This prevents centralization of power and supports building a more decentralized ecosystem.

Main Types of Airdrops and Differences in Participation Methods

Airdrops come in various formats, each with different requirements and preparations. Understanding which type you are participating in is key to efficient engagement.

Snapshot-Based
Requires holding specific cryptocurrencies or NFTs in your wallet at a designated time. Usually involves preparing your wallet and purchasing assets beforehand; after the snapshot, assets are often sold.

Social Media-Linked
Participation is possible through simple actions like following, retweeting, or sharing official accounts. It’s beginner-friendly and does not necessarily require wallet setup.

Service Usage-Based
Involves using specific DEXs or protocols within a set period. You become eligible after actively using the service, requiring more engagement than just gestures.

Hard Fork
Existing currency holders automatically receive a new forked currency. No special action is needed from holders; distribution is based on holdings at the snapshot time.

Multiple Conditions
Combines several criteria, such as holding certain tokens, social media activity, and trading volume, requiring all conditions to be met.

Benefits of Participating

Asset Acquisition Without Risk

The biggest advantage of airdrops is obtaining cryptocurrencies or NFTs without any initial investment. You can access new tokens without exposure to price fluctuation risks associated with purchasing. It’s an ideal entry point for beginners to gain experience in the crypto market while avoiding risks.

Just as companies distribute free samples to attract customers, projects use airdrops as an efficient marketing tool.

Added Value from Price Appreciation of Held Assets

If participation requires holding specific tokens, more people may buy those tokens to qualify. Increased demand can drive up prices, benefiting existing holders with unrealized gains.

However, many participants sell immediately after the snapshot, so price increases may be temporary. It’s important to distinguish between participating in airdrops and making long-term investment decisions.

Early Access to Promising Projects

Airdrops offer a chance to obtain tokens of emerging projects that are not yet widely known. If the project later gets listed or partners with major companies, significant returns could be possible.

It serves as a way to develop market insight and seize growth opportunities.

Improvement of Market Mechanics

Distributing tokens across many holders enhances overall market liquidity. Higher liquidity reduces spreads (difference between buy and sell prices) and slippage (price deviation from expected), lowering trading costs for all traders and increasing market efficiency.

Ensuring Safety and Risks to Watch Out For

Countermeasures Against Scams and Personal Data Leaks

Airdrop scams are rampant. Fraudsters create fake sites resembling official ones to lure users into revealing wallet information or private keys.

The most dangerous are those requesting private keys or wallet passwords. Official airdrops never require recipients to share passwords. Requests for private keys are clear signs of scam.

Safety Checklist:

• Verify URLs match exactly (https://official.com and https://officia1.com are completely different)
• Never input or photograph your private key
• Avoid connecting your wallet to unknown sites (be cautious with MetaMask connection buttons)
• Prepare a dedicated, disposable address for airdrops
• Send small test transactions first
• Confirm official information through multiple sources

If anything seems suspicious, it’s best to skip participation. Lost assets are gone forever.

Risks of Valueless Distributed Tokens

If tokens received for free are not valued in the market, you end up holding assets with no worth. For example, receiving 1,000 tokens worth only 0.01 yen each totals just 10 yen.

Additionally, if you buy specific tokens to meet participation criteria but the airdropped tokens have near-zero value, your purchase costs could result in a total loss.

Calculating costs including gas fees and transaction costs is crucial. Participating in airdrops with high gas fees that yield assets of lower value can lead to negative returns. A quick cost-benefit assessment before participation is essential.

Tax Complexity and Tax Obligations

Cryptocurrencies obtained via airdrops are generally taxable, even if received for free. They are recorded as “miscellaneous income” based on their market value at acquisition.

In Japan, crypto taxation can reach up to approximately 55%, and the tax burden may be higher than expected. For unlisted tokens, there may be no tax at acquisition, but profits from selling them are fully taxable.

Receiving airdrops from multiple exchanges or engaging in multiple trades complicates tax calculations. If annual crypto-related income exceeds 200,000 yen, filing a tax return becomes mandatory.

Using specialized tax tools or consulting a tax professional is recommended to avoid future issues.

Restrictions on Selling Unlisted Tokens on Domestic Exchanges

Many airdropped tokens are not available on Japanese domestic exchanges. Converting them into yen requires using overseas exchanges, which presents challenges such as:

• Complex procedures for opening overseas exchange accounts
• Asset transfers between multiple exchanges and associated fees
• Complicated valuation at tax time
• Documentation for international remittances

Considering these factors, it’s important to verify the liquidity and sellability of airdrops beforehand.

Common Questions and Answers

How to identify safe airdrops?
Check if the official website clearly announces the airdrop, whether private keys are requested, and if participation conditions are transparent. Be wary of suspicious emails, DMs, or excessive personal info requests. The most critical rule is never disclose your private key to anyone.

Are there tax implications for received tokens?
If recognized as market-valued assets, their value at acquisition is taxed as miscellaneous income. For complex cases, consulting a tax professional can prevent future trouble.

Is wallet setup mandatory?
Snapshot-based airdrops require holding assets in a specified wallet. Social media-linked airdrops may not require wallet setup. Confirm the format of the airdrop before preparing.

Can beginners participate?
Social media-linked airdrops are relatively simple and suitable for beginners. For more complex airdrops, acquiring basic knowledge and starting with small amounts is recommended.

Summary of Participating in Airdrops

Airdrops are a unique way to acquire cryptocurrencies and NFTs for free, and when used properly, they can broaden your investment options.

When participating, be vigilant against scams, perform cost-benefit calculations beforehand, and understand tax obligations. Key points summarized:

• Airdrops are events where assets are obtained free of charge upon meeting conditions
• Benefits: risk-free acquisition, potential for asset appreciation, early access to new projects
• Risks: scams, uncertain value, tax burdens, difficulty in selling
• Safe participation requires official confirmation and protecting private keys
• Comparing costs and expected returns beforehand is crucial

Since information is constantly updated, regularly check trusted sources and always verify the latest official info before participating. With security in mind, proceed cautiously to expand your crypto investment opportunities through airdrops.