By Natalie Lord
It seems too good to be true, and sometimes it is. With free money on offer, many people rush to take part in airdrops, but not every airdrop is what it claims to be.
Because airdrops are so popular, there are inevitable scam artists who try and make money from potential airdrop benefactors. We look at a few of the most common scams…
Dump airdrops work by generating short-term hype via constant social media posts. As the interest in the project grows, the value of the tokens increase. Once the tokens are available in the exchanges, the developers quickly dump (sell) all their tokens and walk away with a good profit. As soon as the dumping process is complete, the developers disappear into oblivion and the project dies.
This happened with a project called EDOGE or Ether Doge in October 2017. The idea behind the EDOGE project was that it was going to reinvigorate Dogecoin by creating a version of it on the Ethereum blockchain. The developers created a lot of interest and chat by airdropping 5 million EDOGE tokens. But as soon as the tokens hit the exchanges, the developers dumped all their tokens. The price of the tokens plummeted immediately, the developers were never heard from again and the project was abandoned.
It sounds like anyone could have been taken in by this scam, so how do you safeguard yourself from this type of airdrop scam? The truth is it’s not easy but it is manageable.
The best way to start is by taking a look at the website of the project involved. Find out who the team members are and check them out. Look at their background and previous projects they have been involved in and assess how they performed. You’ll then need to put in some time and read the whitepaper. This will tell you what the project does and where it adds value. You’ll also need to use your intelligence and work out whether you think this business needs a token at all. Remember that a useless token is worthless. If, once you’ve done all this, the project doesn’t make sense to you – stay away.
Private Key Scams
This is a scam that gets repeated frequently. The private key is like a PIN number and something you should safeguard and keep to yourself. It allows perpetrators the ability to access your accounts and your money.
Sometimes you’ll find you’re asked for your private key details in a form you’re filling out to participate in an airdrop. This should set alarm bells ringing as it screams “scam”. You might need to share your public address so that you can receive the airdropped tokens, but you never need to share your private key.
Bait and Switch Airdrops
Bait and Switch Airdrops fool you into signing up for airdrops by other partners when you think you are only signing up for one. In this case the scammer can benefit from receiving referral credit. As well as tricking you into signing up for multiple airdrops, they may also get you to join discord or telegram groups. While partaking in these won’t lose you any money, you will find yourself bombarded with all sorts of messages and information you didn’t want. So if an airdrop asks you to sign up for another one or join a social media group, don’t do it. It’s wise to remember that the airdrops they are asking you to sign up for may also be scam airdrops, so beware.
Most airdrops will require access to personal information like your email address, telegram and twitter handles. Once they have this information, they can sell it to other marketers who will overwhelm you with marketing content. They may also try to phish you and ask for additional details like email passwords or private key details.
The trick to safeguarding yourself from airdrop scams is to be aware and do your research. Check whether a project you’re considering signing up for is legitimate, and stop the process if you’re being asked for sensitive information. We’ve highlighted the red flags now so you should be protected by knowledge and forewarning, and be able to work out which are the honourable airdrops are so that free money can fall your way without incident.