As a seasoned cryptocurrency trader, you might know both hard forks and airdrops terms. Sometimes, cryptocurrency enthusiasts notice the number of cryptocurrency tokens present in their wallets increase without any robust reason; the increment in several tokens available in wallets is a product of airdrop.
These phenomena resemble one another by a massive amount, which is why people confuse airdrops and cryptocurrency hard forks with one another. However, despite being very similar, some highlight disparities between these two. For example, forks usually divide an electronic ledger into consecutive parts, permanent or temporary.
Based on the permanent and temporary division of electronic ledger, forks are further of two types’ hard fork and soft fork. Suppose you have an interest in bitcoin trading. Forks usually happen when the developers and miners alter the code present in a ledger.
The authentic blockchain transactions remain in the first part, whereas the freshly created path on the electronic ledger records some new exchange information. So let’s find out the significant differences between a hard fork and a soft fork. To know more about this study, you can click on the below image:
As discussed above, forks are usually of two types, and when there is a permanent division of blockchain into two parts, it is known as a hard fork.
Since a hard fork occurs at the alteration in blockchain code, this leads to two distinct but sideways paths in the electronic ledger.
Also, Read This: What is the Role of a Blockchain Developer?
Airdrops can also result from hard forks, but they usually incline the extent of tokens present in a cryptocurrency wallet. For example, Ethereum networks provide airdrops to their loyal user, the number of ethers present in your cryptocurrency wallets will increase automatically.
Digital Currency is Hard Forks!
Hard fork takes place when the creator of a cryptocurrency formulate a new flanged part of that digital coin network utilizing a similar fundamental code. In most instances, a hard fork takes place subsequent thought and a complete meeting amongst the network’s developers and validators or nodes.
Sometimes mainstream and large investors of that cryptocurrency are also involved in such meetings. The hard fork may improve the robustness of a digital coin network, and sometimes it is necessary to improve technical aspects of a virtual coin network.
The hype of these events has been impeccable in the cryptocurrency industry for a very long time. When developers started to fork the most prominent digital currency, it led to multiple rumors and speculations. However, profound cryptocurrencies like bitcoin cash and bitcoin gold are just hard forks of bitcoin and have still made it to the biggest cryptocurrencies based on the market cap.
Hard forks and airdrops have many distinctions and similarities at the very same time. For example, airdrops can be a solo event or result from hard forks. Furthermore, in airdrops, you don’t have to redeem new coins from the official cryptocurrency website, as you automatically receive a handsome amount of new tokens in your wallet.
Usually, airdrops are restricted to only a few investors, to be précised the more loyal ones. But many cryptocurrency networks and digital currency exchanges offer airdrop to every user. Events like airdrops are not very usual for profound digital coins—initial con offering and cryptocurrency exchange grants airdrop.
Airdrops can also be classified as a marketing strategy to promote the existence of a cryptocurrency. Unfortunately, airdrops did not receive a hot welcome in the cryptocurrency industry as people consider the coins an investor receives with an airdrop’s assistance are worth pennies. However, with the concept becoming more popular, airdrops are a great way to avail free tokens and diversify the portfolio.
Can Airdrop Lead to a Price Crash?
Airdrops seem to be exceedingly profitable for the investors who receive them, but they can slump the spot value of a digital coin as well. For example, suppose a group of people receive a million tokens each and decide to sell the time they receive it. Then, it can significantly decrease the spot value of tokens; such incidents were there a few times in the industry.
The above-listed portion explains the difference between cryptocurrency airdrops and rigid forks.