CONCEPT: Airdrops and the Importance of Community

Mr. Fox explains the concept of Airdrops and why they're more frequent in strong communities.

Welcome to the first post in a new section of the newsletter known as CONCEPTS, where Mr. Fox breaks down - you guessed it - important concepts in crypto. If you’re new here, explore the Rabbit Hole by reading through some older posts that can be found in the Archive. If you’re a returning subscriber, think about one person who you think would appreciate the newsletter and consider sending it to them.

If you read my post on the Bored Ape Yacht Club, you will remember how I spoke about there being a lot of perks associated with owning an Ape, one of which is being a member of and having access to the Bored Ape Yacht Club. Those perks were felt in full a few weeks ago when every member of BAYC (everybody who owned an Ape) was airdropped a hoodie from the team at Decentraland (a digital universe) for their avatar to wear in their world. Think - if Fortnite gave every player who owned a Marvel skin a new, totally free different skin for them to wear. This, is an example of an airdrop.

In order for you to really understand how airdrops work, let me show you how Decentraland knew who owned an Ape at the time they sent their hoodies out.

To understand the rest of the email, you will need to have read my first email in the INTRODUCTION series which talks about buying and storing your crypto. You can find it here.

So in the email I referenced right above, we talked about how you store your NFTs in a MetaMask wallet. Well, what if I told you that if you went to OpenSea (the website where Apes are bought and sold), and clicked on any Ape, you could see not only who owns it, but that owner’s wallet too!

See it here with my Ape:

And if I click the highlighted link, I get taken here, a page that shows all of the NFTs in my wallet that can be found on OpenSea:

Now if you look at the three items, the first is my Ape, the second is my Dog, and the third is the BAYC hoodie given to me by Decentraland. The part highlighted in yellow is the address of my wallet. Anybody can press the copy button right beside the address. You’re probably wondering how that works - how can your wallet be out there in the open? Can’t you be hacked? The answer is no. The beauty of crypto is that for something to leave your wallet, YOU have to send it. The only thing that address you see there can do is receive crypto. I can post that address on every website in the world and nothing will happen to me.

So when Decentraland wanted to send a hoodie to every Ape, all they had to do was find the wallet address to each Ape on OpenSea, and send it to them!

That is what an Airdrop is. When a person or a group of people each own a particular item (an Ape), and because of they hold that item, they are sent other things for free (Decentraland hoodies).

Airdrops are really cool because they are a great example of new ways companies or projects can interact with their loyal supporters or customers through crypto. It’s like if Nike sent a pair of their running shoes to everybody who owns their stock, only that isn’t possible in the non-crypto world (or at least would be much more difficult).

You might be asking why Decentraland would give away free clothing to Ape owners.

The answer is community.

The Bored Ape Yacht Club community is one of the most enthusiastic, supportive, and innovative groups of people in all of crypto, and Decentraland saw this. For this reason, Decentraland wanted to win the Apes over - give them incentives to join their digital universe over the digital universes of their competitors. With a few clicks of a button, they were able to send their custom-made hoodie to all Apes.

And that right there is an example of new technology in crypto allowing companies and projects to influence entire communities very easily.

This is the importance of community. As you do research into NFT projects and different currencies, you will come across initiatives that make a lot of sense on paper, but don’t have a lot of enthusiasm or support from the general crypto community. If you’re considering investing into something like this, it has to be because you think you see something everybody else doesn’t, and when they finally see it a community will be built.

Otherwise, you should abide by one of the Golden Rules in crypto: no community, no good.

Every single successful project in crypto is supported by an enthusiastic community. Bitcoin has the most diehard base you will ever meet, Dogecoin holders have made it their mission to rule the world through meme, and the Ethereum crowd is fixated on overtaking Bitcoin. The list goes on, you get the point.

So, what’s the punch-line? How do you take this with you in your investing?

Understand that technology in crypto like Airdrops has made the value of community much much greater, especially in NFTs. Many times other currencies or projects will Airdrop your community something not based on how strong the currency you hold is or how interesting your NFT is, but simply because you’re a part of a powerful group that they want the attention of.

Invest in strong NFTs and currencies, and invest in strong communities.

How can you tell if a strong community exists around the investment you’re looking at? Join their Discord and spend some time reading through their channels. Follow some people from the project on Twitter and see what their engagement is like. Usually you can tell quite quickly whether something is backed by a strong community or not.

And down the Rabbit Hole we continue.

Mr. Fox.