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Crypto Pipeline Part 1: Intro to Airdrops
🕑 Added 2020-06-04 18:21:31 +0000 UTCThere exists an entire world a cryptocurrencies that most of us will never explore without some guidance getting started. That is a shame, because a properly postured crypto wallet can continue receiving cryptocurrencies without doing much work at all. This opportunity comes in the form of cryptocurrency airdrops.
Over the next several days while I am stuck in a bunker at my day job, I'll be investigating cryptocurrency airdrops with the goal of determining how to establish your holdings to receive free tokens as passively as possible.
In this post, we are laying the groundwork for participating in airdrops by getting our wallet established. We will go further in other posts later in the week.
What is an Airdrop?
An airdrop is when a cryptocurrency developer gives you their tokens or coins for free as part of a promotion. This is the same concept as a new energy drink producer giving out shots of Blak Fire Caffeine Booster to promote their product.
Most airdropped cryptos are useless. In fact, most cryptocurrencies overall are useless. But when we receive cryptocurrencies from airdrops, we can hang onto them until they are tradeable on an exchange, and then trade them for Ethereum, Bitcoin, or actual money (called fiat by the crypto fanboys).
Most airdrops will require you to perform some simple tasks like spamming your friends on Facebook or Instagram before you are eligible to receive anything. Others will require you to perform much more complicated tasks, like downloading an app or software and using it. Some require almost no effort to receive the airdrop. Let's stick to the simple ones. We will have to download some software. But we will keep it light.
What is the first step?
There are a handful of steps we need to take so we can ensure we receive our tokens, have access to them, can sell them, and then recover the loot.
Follow me, and I will lead you to free money. Let's take these one at a time, with this post addressing how to establish a suitable wallet.
Step 1) Establish an ERC-20 wallet: You cannot receive airdrops in an exchange address on something like Coinbase. You need to set up your own wallet to receive the airdrops. This acts like a digital address where you can send and receive tokens. ERC-20 wallets are compatible with the Ethereum blockchain, which many airdropped coins utilize. Not all airdrops use the Ethereum blockchain, but most do. If you don't know what the Ethereum blockchain is, just know that it is a common platform for creating cryptocurrencies. We must create an ERC-20 wallet. The easiest way to achieve this is to make a wallet at myetherwallet.com
At myetherwallet.com, your first task is to hit "create a new wallet." You will be tagged with three options:
myetherwallet.com recommends you download their app. But I do not want to download some bitchass app that I can't use unless I am sitting at a computer so I can scan the QR code. It's annoying. It also constantly cuts out, forcing you to reconnect.
We are going to use the second option instead. Select "by keystore file" and create a password. This password will be used to encrypt the wallet the software creates when you hit "next." In truth, it would better be described as a cipher than a password. Make it something unique and commit it to memory.
When you hit "next," the software will create a wallet address that is encrypted with the password you just utilized.
Once you hit "access my wallet," your computer will start to download a Keystore File. Your computer won't be able to open it if you attempt. Instead, save the file to a folder where you can easily find it later (if you get lost, hit ctrl+j to open up your downloads; it's probably there).
Congratulations. You have created an ERC-20 wallet, encrypted it with a password, and stashed the encrypted key on your computer in a place you can easily find.
How do I access my wallet?
Now that you have a keystore file, let's access your wallet. For our purposes, you will be doing this often. Keep in mind that this wallet can only be accessed from a computer on which you've saved your Keystore File (that funky file that your computer can't open). We will explore how to trade our airdropped coins in another post. For now, let's just open up our wallet. Once we do that, step 1 is complete.
Head back to HQ and this time select "access my wallet."
Use the "not recommended" method of accessing your wallet by selecting "Software." Myetherwallet will note that this method is not to be used casually because it is the least secure method of maintaining and accessing a wallet. This is true; using a keystore file is not a good way to secure any serious amount of crypto. But in our case, we are going to be receiving a series of low-value airdrops and then moving the coins out of our digital wallets quickly. Use a more secure wallet if you intend to holding large amounts of ethereum in your wallet. For our purposes of collecting airdrops, let's prioritize accessibility over security.
You will be prompted to select a method of opening your wallet using software. Since we created our wallet with a Keystore File, select that option. This will prompt you to select your encrypted private key. Remember that funky file? Now is the time to open it. You will then enter your password to decrypt your key.
Myetherwallet will automatically redirect you to your wallet. You now have access to your coins and can send crypto to another ERC-20 wallet or swap one Ethereum-based coin for another.
Any Tips?
Keep in mind that ERC-20 wallets are only suitable for airdrops that use the Ethereum blockchain. Not all airdropped coins will use this format, but this wallet will be suitable for most.
Do not lose your password. There is no way to decrypt your key without it, so if that password is gone, so is your crypto.
This wallet will not be suitable for long-term storage of cryptocurrency. If you want to hold coins long-term, you will need a more secure method such as a hardware wallet.
Congratulations. You now have an ERC-20-compatible wallet and have an address where you can receive airdropped cryptocurrency tokens. You have completed the first step.
In the next post, we will explore how to use etherscan.io to check balances and verify transactions to and from our wallet. This will allow us to see when we received an airdrop and give us the information we need in order to move the airdrop out of our wallet and into cash or a proper coin.
