Have you ever heard about digital currency?
If you have ever been known to the digital market, even for a short period, you must have heard about the two trending terms, Hard Forks and Airdrops.
Some people might consider them siblings in some ways but there are differences between the two. You might have had an increase in your digital currency wallet without any reason. That was because of the airdrop.
We will be giving you an insight into these terms and a clear picture of cryptocurrency hard forks Vs. airdrops.
Cryptocurrency hard fork
A digital currency is held by a group of developers. In case when some of the developer cliques want to take the currency in a different direction.
So after discussion and mutual understanding of the team, the currency miners, and sometimes investors, a second branch of the currency is made.
The two forks of the currency do not have the same code. The original currency remains as such while the new one adopts the modified protocols and adoptions for the code.
The hard fork, in short, sometimes, is necessary to resolve matters between developers and miners. At other times, it is introduced to promote a better version of crypto coin.
The hard fork has been among the most hyped moments in history. The hard fork story of Bitcoin is one of them.
The famous Bitcoin Cash fork has generated a great number of investors’ attention. Since then, dozens of Bitcoin forks were generated which became part of everyone’s talk.
Airdrop, on the other hand, is the direct delivery of currency tokens to coin holders or investors. This can be done either by free offering to developers or ICO (Initial Coin Offering) purchasing. The tokens are mainly given to preexisting coin holders like Bitcoin and Ethereum.
In case of an airdrop, an equal volume of currency tokens is given to the coin holders. Same in the case of a hard fork, an equivalent amount of cash tokens is allocated to the new blockchain holders.
But the main purpose of airdrop sharing is the boosting of new currency. Some of the air droppings were d even happened unannounced. As a result, the Bitcoin and Ethereum holders did not know how much air-droppings have been done to date.
Sometimes airdropping can produce a surplus number of unnecessary coins in the market. That’s why some digital marketers think that air-dropping is a waste of time.
As soon as the new tokens are resold, their prices start to decrease considerably. As a result, some cryptocurrencies cannot make much progress.
That is the point where it is different from a hard fork, where a drop in one blockchain currency does not affect the market of the original currency.
Cryptocurrency hard fork vs. Airdrop, overview
A hard fork occurs when there is a change in the code. A split in blockchain creates two paths. One path has the new blockchain while the other has the original blockchain.
Airdrop, on the other hand, occurs when you deposit currency vouchers directly into the user’s wallet. The new cryptocurrency produced by a hard fork can be sent to another person through Airdrop. This is mainly done for promotional reasons.
The main difference between the two will be clear from the checkpoints below.
Hard fork checkpoints
• It is the division of a single cryptocurrency into two copies of different featural adjustments.
• Market rate of one blockchain is independent to that of another.
• Splitting causes a decrease in the market value of an original coin.
• It involves the delivery of the equivalent amount of cash tokens to other currency holders.
• Consecutive reselling of the token decreases the coin’s market value considerably.
How do forks and airdrop affect the market?
Constant selling and reselling of coins, whether forks or airdrops, cause a sharp decrease in the market value of that currency. There are many events in the past when a heavy decline in a coin’s market price caused a loss in its value.
A popular decline in Bitcoin Cash hard fork occurred in 2017. At that time, Bitcoin lost its 80% of market value as uninterested coin holders started selling it at low costs. The same is the case with Ethereum Classic (ETC), which holds a value of 66 dollars compared to Ethereum’s (ETH) value of 2280 dollars in May 2021.
However, this is not always the case, some of the newly created coins get great success in the market. In 2016, virtual currency Decred airdropped 258,0000 or 500,000 euros. Also, its token value has risen from 2 euros to 170 euros.
In 2019, Squeezer released an airdrop that gained over 20,000 new users in an hour. This shows that airdropping is a great source of gaining new users to market. Also, it drives up the competition within the market.
How can investors get benefits through fork and airdrop?
Airdropping and forks are easy ways of earning passive income. For this, you need to familiarize yourself with the market. This would help you decide whether to hold or sell the token.
Another option is to reinvest the tokens if the token or network supports staking.
Moreover, users who want to earn passive income through airdropping should need airdrop aggregators. Their role is to combine lists of currently running campaigns.
A hard fork occurs when a blockchain alters to create a new blockchain that runs parallel to the original. Users who invest in the blockchain before the hard fork automatically receive the tokens for the new blockchain.
On the other hand, airdrop occurs when users send the tokens directly into other coin holders’ wallets. Often it occurs in return for social media promotions or other bounties. Moreover, it is also done to attract users to the market and to increase market competition.
In conclusion, it is worth adding that not all cryptocurrency wallets support hard forks. The famous Coinmotion has supported Bitcoin and Ethereum hard forks. In coinmotion, users can safely store their cryptocurrencies and earn valuable interest.
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