Cryptocurrency Hard Fork and Airdrops: Investing in the cryptocurrency market is certainly new territory for a lot of people. However, with the right knowledge and guidance, you can make profits over time.
If you have decided to begin your cryptocurrency investment, you might want to know about two of the most common terms that are used in this market.
Hard Fork and Airdrop.
These two terms are frequently used in the cryptocurrency world to define two instances that sometimes surprise investors. There are instances when investors suddenly find some new cryptocurrency tokens delivered in their digital wallets.
However, it is not a random event, instead, it is the result of a hard fork and airdrop. These two terms go hand in hand; however, they differ fundamentally. Let’s take a quick look.
Hard Fork
When the second branch of a digital currency is created by the developers, it results in a hard fork. This event is not random and doesn’t happen on its own. Hard forks happen after much deliberation and discussion amongst developers, investors, and miners.
Hard forks are required when each of the fractions involved in the development of cryptocurrency wants to take it in a different direction.
In a hard fork, the two cryptocurrencies don’t have the same code. Where the new cryptocurrency token has a new code based on the basic code, the original cryptocurrency keeps ongoing as it was before. Most people think that hard forks occur due to disputes between miners and developers, however, such is not the case always! Sometimes, the developers want to come up with a new cryptocurrency token and hence a hard fork becomes imminent.
Airdrops
On the contrary, airdrops include the delivery of cryptocurrency tokens to the digital wallet of some investors. The delivery of new tokens can happen using different ways such as ICO or freebies from developers.
If you own a preexisting blockchain such as Ethereum or blockchain, an airdrop will deliver new cryptocurrency tokens to your digital wallet.
The main aim of airdrops is to introduce investors to new cryptocurrency tokens. However, airdrops don’t always work as intended. Most of the time, investors will sell these new cryptocurrency tokens, thus dropping the price in the market. Since investors don’t know much about these new tokens, they are skeptical about buying them.
This reduction in price affects the overall performance of the new cryptocurrency token. Sometimes, airdrops are the reason why a new token doesn’t take off in the market as expected by developers.
Final Takeaway
Knowing the fundamental difference between hard fork and airdrops will help you to determine how to tackle surprise tokens in your digital wallet.
Don’t hesitate to learn about these new tokens, buy or sell them accordingly.
To know more about cryptocurrency strategies, news, insights, guides, keep reading our blogs on Coin Informer!
