Hard Forks & Airdrops. What’s the Difference?

PointPay
4 min readMar 26, 2022

If you’ve followed the crypto industry for some time, you’ve probably already noticed the world of crypto assets has many confusing terminologies. Hard forks and airdrops might be two of them.

PointPay experts are sure that if you’re interested in this rapidly growing industry or have already started trading on the PointPay platform, being informed is imperative. So let’s gain an insight into hard forks and airdrops, and understand why they are considered to be the important pillars of the entire crypto world.

What is an Airdrop?

An airdrop is a marketing ploy when tokens are sent to users’ wallets for free. It is the delivery of a cryptocurrency to a particular group of traders and investors. This tactic is gaining popularity, and many new crypto projects use it to expand their influence. Airdrop can occur during a token’s pre-launch step by inserting a wallet address into an airdrop drive form or entirely by keeping another token.

Let’s take a look at an example. If you have Bitcoins, you can receive the corresponding tokens proportional to this trading pair’s amount. As a rule, an airdrop extends the token’s lifespan since participants usually value the coins received this way more. The process lowers the selling pressure of a token through the effective holding of the airdropped coin for the long term. Those responsible for issuing tokens see the airdrop as a fundamental moment to make people use their tokens.

Usually, an airdrop is issued in exchange for completing one or more small social tasks, for example:

  • Social media account subscription
  • Re-sharing and/or retweeting one of the posts
  • Sending and/or receiving a transaction using a particular crypto platform
  • Creating an account
  • Subscribing to receive news and updates

An airdrop is an attempt to stick out of the crowd. Marketing techniques are needed if the cryptocurrency is to succeed. However, there are some downsides to airdrops as well. Airdrops can be pump-and-dump schemes where owners of a cryptocurrency could artificially inflate its value in order to make quick profits.

What is a hard fork?

A hard fork is a radical change to a network’s protocol that makes previously invalid blocks and transactions valid (or vice versa). It results from the absolute divination of the blockchain into two parts. Once it splits, it starts to record the transaction of new transactions as well. Therefore, it only occurs when most developers modify the code of an existing system.

Blocks created using the new rules will be considered invalid for the old network. These invalid blocks indicate that all nodes and networks must operate in accordance with these new rules. It can be compared to a “backward-incompatible” software update.

A Bitcoin hard fork is a good example of the entire process. It refers to a radical change to the protocol of Bitcoin’s blockchain that effectively results in two branches. One follows the previous protocol, and another one follows the new version. Bitcoin hard forks tend to improve transaction speed by enhancing the size of blockchain by about 8 times. Developers, miners, and full node users are responsible for implicating a hard fork in a cryptocurrency network.

You may also have heard about the soft fork. Unlike a hard fork, a soft fork is backward-compatible with the existing pre-fork block. It means the upgraded nodes will still see the chain as valid. With that in mind, we can conclude that a soft fork is considered the gentler option that is often used to implement new features at a programming level. On the contrary, a hard fork is more about completely changing an operating system. It aims to add extra functionality, correct security risks, and reverse transactions on the blockchain.

Final thoughts

Airdrops and hard forks may seem similar in some ways. For example, like hard forks, airdrops can coincide with users seeing new tokens popping up in the crypto market. However, their concepts are different. A hard fork occurs when there’s a permanent split in a blockchain, while an airdrop occurs when a new token is deposited directly into traders’ wallets.

As the cryptocurrency market grows and gains attention, PointPay experts are doing their best to help users stay up to date and increase knowledge about the exciting crypto industry. Follow us on social media for more info and tips!

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