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Airdrops Vs Icos: Differences Explained

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By CNBCTV18.com  IST (Published)

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Let’s learn more about ICOs and airdrops and how they differ from one another.

The crypto industry is expanding at a dizzying rate. Sometimes, it seems like there is a new crypto project launched every day. However, one thing that all projects, new and old, have in common is the need to raise funds and build awareness.

This is where initial coin offerings (ICOs) and airdrops come into the picture. While both these activities are helpful for a project in several ways, they are very different concepts. Let’s learn more about ICOs and airdrops and how they differ from one another.

What is an Airdrop

An airdrop is an event wherein a new or existing crypto project distributes its tokens to candidates who meet some pre-decided requirements. It is a marketing strategy in which small amounts of cryptocurrency are sent to a wallet address for free or in exchange for doing particular tasks.

What is an ICO

An Initial Coin Offering (ICO) is similar to an Initial Public Offering of stocks. Companies use ICOs to raise funds for developing and launching a crypto/web3 project. Investors buy the project tokens at lower rates, hoping they will appreciate over time.

Differences between Airdrop and ICO

Motive:

Airdrops are primarily a marketing strategy used by startups and new crypto projects. The main motive of airdrops is to raise awareness and promote a cryptocurrency project. Airdrops encourage people and investors to engage with the project and its social media channels. It can also be deployed to reward existing investors and token holders.

On the other hand, ICOs raise funds to support the development and launch of cryptocurrency projects. The main motive of an ICO is to invite investors and raise funds for the cryptocurrency project that will be launched. Since not all startups and projects have enough wealth at inception, ICOs are a helpful way to get things off the ground.

Method:

The process of an airdrop begins by deciding the goals and objectives that need to be achieved. Once the objective is decided, the developers need to raise awareness about the airdrop. This usually means telling people what they need to do to become eligible for the airdrop and what they stand to receive in return.

After this, developers need to collect information about the eligible users. This entails the collection of wallet addresses, email ids, or a snapshot of the user’s wallet balance. Once the required data is collected, the tokens are distributed from a treasury wallet.

When an ICO is conducted, the company must first decide the coin’s structure, as this determines the price and supply of the token. Along with the coin’s structure, the company must release the project’s ‘whitepaper’.

This document outlines the project’s aim, what the token will be used for and what it will achieve. It also discloses the number of tokens distributed to the public and the amount remaining with the founders. These details help investors ascertain the project’s scope and whether or not they should invest in the ICO.

Eligibility:

For a user to be eligible for an airdrop, there are specific criteria that the company can decide upon. Tokens can be airdropped to users who have taken part in a certain activity, like retweeting or posting something on Instagram.

This is a great way for the company to promote the project and create a buzz on social media. At times, only the investors that already hold a certain number of tokens are eligible for the airdrop. The company can also randomly select users through a raffle system.

The good thing about an ICO is that there is no entry barrier. An investor can participate in the ICO as long as they have the necessary funds. ICOs aren’t as popular now because investors have been subject to many scams. Therefore, researching the ICO, the company, and the people behind it is crucial before investing your money.

Conclusion

ICOs and Airdrops are both helpful in their own ways, and developers can use them to support the project at different stages of the token’s lifecycle. Airdrops and ICOs can also be a good way for investors to make returns. However, since ICOs involve putting your money on the line, a deep dive into the legitimacy and scope of the project is a must.


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QuickCheck: Is cryptocurrency mining illegal in Malaysia?

OVER the last few months, if not years, there have been many reports of police raiding cryptocurrency, such as Bitcoin mining operations and seizing thousands of ringgit in equipment. Is such mining illegal in Malaysia?

Verdict:

NOT ILLEGAL

Firstly, the cryptocurrency operations are being raided not because they are mining crypto, but rather because they are stealing electricity from Tenaga Nasional.

It is perfectly legal in Malaysia to mine, buy and sell cryptocurrency.

Cryptocurrency, however, is not recognised as legal tender in the country so cannot be used to pay for goods and services.

While not recognised as legal tender, it is recognised as an intangible commodity and profits made from trading it can be taxed.

This brings it under the purview of the Malaysian Securities Commission, which has recognised several crypto exchanges for Malaysians to trade in.

While mining crypto may be legal (so long as you are paying your electricity bills), other laws and by-laws might prohibit where it can be done.

Crypto mining is a noisy affair, with a single mining rig capable of producing up to 90 decibels of sound, which is louder than a washing machine or leaf blower.

Most miners need a roomful of these devices to be profitable so you can imagine how much noise it would produce and why it would not be allowed in residential areas.

A typical Bitcoin mining farm. - photo courtesy of BloombergA typical Bitcoin mining farm. – photo courtesy of Bloomberg

Secondly, most if not all reports claiming that a Bitcoin operation has been raided in Malaysia is actually in error.

The vast majority of these operations do not mine Bitcoin, but rather another alt coin (alternative coin) such as Ethereum.

Simply put, Bitcoin mining is an expensive exercise where one operation requires almost innumerable stacks of machines stored in a warehouse with electricity consumption touching terawatts per hour.

Some operations overseas have refurbished abandoned coal power stations to power their operations.

These are industrial level affairs so it’s reasonable to say that they cannot be hidden in a condominium or house.

There are over 18,000 cryptocurrencies in existence, but only 728 are technically mineable.

Of this, most small-time miners would be concentrating on a handful of ‘coins’ that their machines are capable of handling with Bitcoin being completely out of scope for them.

References:

1. https://www.sc.com.my/api/documentms/download.ashx?id=aeb10f62-944b-4d83-8aa0-4ed492dc1109

2. https://news.bitcoin.com/mineable-cryptocurrencies-are-far-more-valuable-than-non-mineable-coins/#:~:text=Moreover%2C%20there%20are%20only%20eight,XMR%2C%20DASH%2C%20and%20ETC.

3. https://www.coinlore.com/mineable-coins/all

4. https://www.investopedia.com/tech/most-important-cryptocurrencies-other-than-bitcoin/#:~:text=Click%20Play%20to%20Learn%20All%20About%20Altcoins&text=One%20reason%20for%20this%20is,communities%20of%20backers%20and%20investors.

5. https://www.nasdaq.com/articles/we-hear-you%3A-bitcoin-mining-noise-pollution-is-a-solved-problem

6. https://www.cdc.gov/nceh/hearing_loss/what_noises_cause_hearing_loss.html




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Niagara Falls’ ties to cryptocurrency mining

A single Bitcoin is valued at over $41,000 — but it takes thousands of computers and tons of energy to competitively mine the cryptocurrency.

The U.S. is the world leader in Bitcoin mining — followed by Kazakhstan, Russia, Canada and Ireland. The industry leader used to be China, until the country’s government banned decentralized currencies last year.

The profit margins to mine cryptocurrencies can be tight after factoring the costs for all the hardware, electricity and setup.

That’s why many companies have flocked to areas with cheap coal or fossil fuel-based energy — leading to widespread criticism that the industry is polluting the planet and cashing in on climate change.

It takes about 2,000-kilowatt hours to calculate a single Bitcoin transaction. That’s the same amount of electricity the average U.S. household uses over the course of two months. And if you combine all crypto mining worldwide, it consumes more energy than the entire country of Norway.

The foreign currency exchange site forexsuggest.com estimates miners will generate 57 million tons of CO2 emissions this year due to the electricity needed to mine Bitcoin.

However, a move is underway to make crypto mining more earth-friendly, and the New York-based company BlockFusion is leading the way.

“We made a conscious decision that we would not burn fossil fuels to generate virtual assets like Bitcoin,” CEO Alex Martini said. “It was very important for us to use clean energy.”

Thanks to Niagara Falls, that “clean energy” is abundant in upstate New York. The state is now responsible for about 20% of crypto mining done in the U.S.

“We thought it was indicative of where technology was going in the 21st century,” Martini said. “You don’t burn coal to generate virtual assets, but you can use clean power with zero carbon emission.”

However, now the concern is that these “green” crypto companies are using more than their fair share of the clean hydroelectric energy and not hiring many people locally.

Companies like BlockFusion are operating out of old coal plants. These old buildings used to support thousands of jobs in the community, but crypto mining doesn’t require nearly the same number of workers.

In response, local and state officials are trying to regulate the quickly expanding industry by passing new restrictions and guidelines. 

The city of Niagara Falls has a six-month moratorium on new businesses, and the state requires those companies be licensed. New York also just passed a new annual fee on crypto companies, which they’ll have to pay with cash or check — not digital currency.




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Tracking cryptocurrency news from around over the world

Most cryptocurrencies are down 7-10% today as global financial markets experience a red day

Use promocode TNM51 at www.giottus.com/profile#promo after registration to get Rs.51 worth free Bitcoin.

Bitcoin has, for the first time in 2022, dipped below the psychological support level of $40,000 today reflecting the larger bearish sentiment among the market participants. Overall crypto market slid by more than 8% today as global financial markets reacted in the red to lingering concerns of interest rate hikes by the US Federal Reserve. Crypto market is expected to go lower in the next 2 weeks before a strong relief rally can bring positive momentum back. Investors are advised to remain patient as Q1 2022 promises to be a volatile ride. However, these prices may also indicate a great buying opportunity for the future.

In this article, we will take a brief look at the events that influenced the cryptocurrency markets this week.


Regulations and Hacks in Crypto

Russia, home to a thriving crypto mining industry, has proposed a blanket ban on the use and mining of all cryptocurrencies. The Central Bank of Russia has claimed that crypto resembles a pyramid scheme and undermines the sovereignty of monetary policy. Already having banned the usage of crypto for payments, the bank stated that mining is hurting the country’s green agenda and endangering Russia’s energy supply. It is imperative to note that more than 7 trillion rubles ($92 billion) of assets are held in about 17 million crypto wallets in Russia.

Crypto.com, a Singapore-based crypto exchange, faced a security breach this week after several users made complaints that their assets were stolen. According to estimates, around $34 million has been compromised due to transactions that were being authorized without the two-factor authentication (2FA) control being entered by the user. The exchange has credited all the lost coins to its users.


NFTs gain traction

One of the biggest challenges for mainstream adoption of non fungible token (NFTs) has been the current complexities associated with buying and selling a NFT as most of the existing NFT marketplaces only support crypto payments. To tackle that, US-based cryptocurrency platform Coinbase has announced that it is working with multinational financial services firm Mastercard to allow users to buy NFTs using cards.

Twitter launched a tool yesterday through which users can display their NFTs as their profile pictures. The feature is currently available only on iOS that allows users to connect their twitter accounts to crypto wallets that contain the NFTs. Twitter will display NFT profile pictures as hexagons as opposed to circles that are available to other users. Following suit, Meta is also looking to capitalize on the NFT craze as news sources claim they are developing ways to create, display and sell NFTs on Facebook and Instagram. Meta is also reportedly working on a marketplace to buy and sell NFTs.

Bored Ape Yacht Club (BAYC), the NFT art which had recently caught the attention of many celebrities all around the world continues to impress more as top tennis player Serena Williams and football star Neymar Jr posted BAYC apes in their twitter accounts. Neymar paid $1 million for the NFT while Serena seems to have received it as a gift.


NY Mayor Gets Bitcoin

New York City Mayor Eric Adams has announced that his first paycheck will be automatically converted into cryptocurrency via Coinbase Global. The Mayor had said last year that he would receive his first three paychecks in Bitcoin and vowed to make New York a centre of crypto innovation.

Disclaimer:This article was authored by Giottus Cryptocurrency Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.




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