Definition
Airdrop
An airdrop is a distribution of free crypto tokens to wallet holders, often to promote a project or reward early users; received tokens can have tax implications in India. This is informational.
An airdrop sends tokens to many wallets, typically to bootstrap a community, reward past activity or market a new project. Recipients usually do not pay for the tokens, though some airdrops require simple tasks or holding another asset.
Airdrops are frequently used in scams and phishing — fake airdrops lure users into connecting wallets or signing malicious approvals that drain funds, so unsolicited tokens warrant caution. Received tokens may also be worthless or illiquid.
In India, airdropped tokens are VDAs and their receipt and subsequent transfer can trigger tax under the VDA rules. This entry is informational only, not investment advice; treat airdrops with care.
Related terms
- Crypto Wallet (Hot vs Cold)A crypto wallet stores the private keys that control your crypto assets; a hot wallet is internet-connected for convenience, while a cold wallet stays offline for security. This is informational.
- Web3Web3 is a vision of an internet built on blockchains where users own their data, identity and assets through tokens and wallets rather than relying on centralised platforms. This is informational.
- TokenomicsTokenomics is the study of a crypto token's economic design — its supply, issuance, distribution and incentives — which shapes its potential value and risks. This is informational, not advice.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.