If you have read our article, Are Crypto Airdrops worth your time? Then you remember:
- Airdrops are a way to reward early adopters of a crypto project with tokens in the project.
- While there are differences, investors can think of these tokens as getting free โsharesโ in the โcompany.โ
- Airdrops have advantages and disadvantages: while they create initial users, many "airdrop farmers" are only there to get free tokens.
- Airdrop farming could be worth it for tech-savvy investors who have a lot of time on their hands. (But be careful).
- For conservative investors, they can wait until the token is launched and then buy it at a discount (as airdrop farmers sell their tokens).
In this guide, we will give you our take on whether crypto points, or โpoint farmingโ is worth your time. we will explain to you how crypto points workthe difference between points versus airdropsand the advantages and disadvantages for investors.
How crypto points work
Points are one step away from airdrops.
As in our article on Crypto Airdrops, let's imagine again that OpenAI is going to launch an IPO. Using ChatGPT, OpenAI's flagship product, is rumored to make you eligible for free shares on OpenAI when they become public.
In crypto, that's an "airdrop", only they issue tokens instead of shares.
Now, let's say you're a fledgling AI startup called WideOpenAI, and it's hard to convince users that an airdrop is in the future. To gain users, you can broadcast points if people use WideOpenAI. Or tweet about WideOpenAI. Or join the WideOpenAI community. Etc.
If your points program is successful enough to get some traction, you launch the IPO, convert the points into shares in your company, and all the early adopters will be happy.
Where airdrops are built on a promise, points provide proof.
Proof that you were committed in the early days. Proof that you helped build the network. Proof that you "qualify" for those tokens (if they ever arrive).
However, because points are one step away from tokens, investors must consider additional advantages and disadvantages.
The problems with punctual agriculture
For crypto companies:
- Points = bribes: Like airdrops, points attract a lot of unwanted users, so it can be difficult to know if you really have a good product or if it's just about racking up points.
- No true loyalty: Many of these point farmers, like airdrop farmers, will withdraw points as soon as they can, reducing the value of their tokens and their company.
- Points hide performance: Spot focus may obscure the TRUE success metrics (like customers and actual revenue), which can spell disaster later.
For cryptocurrency investors:
- Points โ Promise: There is no guarantee that points will ever be converted to tokens.
- uncertain value: Even if they do, there is no conversion rate, so your points may be worth almost nothing. (There are no rules that say 100 points = 1 token, or whatever.)
- Concerns about centralization: And points are usually stored in centralized databases, not on the blockchain. Who audits the points??
This has not prevented the creation of a new โpremarketโ for purchase and sale points. Basically, it's betting on the future value of points within a future airdrop - a bet on top of a bet.
And remember, Points are free for businesses to create., making it the most speculative of the crypto bets. You have no idea how the points will eventually translate into tokens, if at all!
The power of spot farming
However, points programs have some advantages.
For crypto companies:
- Loyalty incentives: Rewards programs are a proven business model for building loyalty (credit card rewards, Starbucks rewards, etc.). They can work.
- User acquisition and network growth.: They are a way for crypto companies to boost users, which (if successful) can generate network effects that actually drive value.
- Community involvement: They can also create a community, as many crypto points programs encourage joining a Discord server or online forum.
For cryptocurrency investors:
- Earning Potential: If you have free time and are a geek, then collecting points could result in a token airdrop, which could earn you a little money. (Maybe a lot, if the token is on the moon).
- Skill development: Using these products in their early stages is often technically complicated, so you will learn something about how they work.
- Influence on development: Being an early adopter means you often have a say in how the product evolves, which in turn can improve it and lead to a more valuable token.
However, if you are going to participate in points programs, stay safe. Stick to reputable projects and, if possible, use a separate crypto wallet to accumulate points, away from your main investments.
Investor Conclusion
Accumulating points has both opportunities and risks.
For most investors, you can leave the points to the professionals.. They are speculative. There are no guaranteed returns. Getting rich from point farming is a long shot at best.
However, If you like cryptocurrencies, point farming offers more than just money. You can improve your skills, join communities, and help shape these innovative new products.
So focus points agriculture with a mindset that values community learning and participation as well as increasing your suitcases.
But Always maintain a long-term mindset.- Remember, the first users of bitcoin were those who could have bought it for pennies. (But how many did it and kept it up for the next decade?)
Accumulating points is not a one-size-fits-all strategy. It is a niche for the adventurous and tech-savvy., and those who enjoy both the journey and the destination. For the rest of us, we can wait for the token launch... if there ever is one.
Health, wealth and happiness,
John Hargrave
Editor, Bitcoin Market Diary
