Crypto Token Airdrops Are a Marketing Ploy

Michael J. Casey is the chairman of CoinDesk's advisory board and a senior advisor for blockchain research at MIT's Digital Currency Initiative.

Blockchain CEO Peter Smith, lauding the Stellar network for being "Built for scalability" with "An active and growing ecosystem," said the lumen airdrop would put "Users first" so they can "Test, try, trade, and transact with new, trusted cryptoassets in a safe and easy way."

Leveraging Blockchain's almost 30 million wallets, he said, "We will increase the network's utility by many orders of magnitude."

I'm not going to take sides here but I think the debate could be better served by, first, viewing airdrops as a marketing expense in the service of promoting community adoption and, second, recognizing that, one way or another, adoption requires some level of marketing.

For fiat currencies, governments carry out an indirect, complex marketing process by promoting the strength and effectiveness of their economies, thus encouraging both citizens and non-citizens to use their currencies to exchange and store value.

We might even think of welfare distributions as airdrops with intent to promote economic activity and therefore widen currency adoption.

The development of a passionate, engaged bitcoin community - which was integral to the cryptocurrency's success - depended on a variety of marketing exercises, all of which incurred costs in resources, effort or money.

It's an understandably attractive viewpoint, one conveyed in Tuur Demeester's critique of Blockchain's lumen airdrop.

I'm as wary as the next person of corporate centralization and of the danger that scams could set back the societal progress that cryptocurrencies and blockchain applications offer in fostering low-friction, peer-to-peer economic opportunity.

CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.