A bitcoin wallet company is giving away $125m-worth of cryptocurrency
Bitcoin wallet provider Blockchain is giving away $125m-worth (£96m) of cryptocurrency in the biggest ever crypto “airdrop.”
Blockchain CEO Peter Smith announced at Web Summit in Lisbon on Tuesday that his company will give away $125m-worth of Stellar Lumens (XLM) tokens to his company’s nearly 30 million customers.
Blockchain provides cryptocurrency digital wallets for retail investors around the world. Customers who verify their wallets with Blockchain will be eligible for the giveaway, which starts today and will last for six months.
The cryptocurrency is being provided by the Stellar Development Foundation, the non-profit that created and promotes the currency. Stellar Lumens is the brainchild of Jed McCaled, one of the cofounders of cryptocurrency XRP and early bitcoin exchange MtGox. He created Stellar Lumens in 2014 as a crypto-powered platform designed to make cross-currency and cross-border money transfers easier and cheaper.
Blockchain’s Stellar Lumens giveaway is an example of a so-called “airdrop.” This is where cryptocurrencies are distributed to online wallets for free as part of efforts to drum up support for the project. They have gained popularity over the last 18 months as the number of cryptocurrencies in existence has exploded to over 2,000.
The Stellar Lumens giveaway is by far the biggest crypto airdrop to date. The aim is to “dramatically speed up” adoption of the Stellar Lumens platform, Blockchain CEO Peter Smith told Yahoo Finance UK.
McCaleb said in a statement: “We believe that airdrops are central to creating a more inclusive digital economy. Giving away lumens [XLM] for free is an invitation to communities to design the services they need.”
Stellar Lumens is already one of the biggest cryptocurrencies in the world, with a market value of close to $5bn and daily turnover of around $50m. As of Monday evening, Stellar Lumens were trading for about $0.19.
Blockchain has no investment in Stellar Lumens and Smith said the company instigated a trading blackout for all staff as soon as the two parties entered talks. That blackout ends Tuesday and Smith said he intended to boost his Stellar Lumens holdings when it does.
“The folks at Stellar, including Jed, are really mission driven and what they want to see is the adoption of their protocol,” said Smith.
“We’ve been approached by a lot of projects. I think the last I checked it was up to about 40. We were immediately drawn to stellar because of their mission. We’re at Blockchain to create a community driven and controlled financial system.”
Smith said the benefit for Blockchain was in giving its customers more utility in the product by introducing them to “high quality coins.” The company also hopes the giveaway will drive growth in its wallet downloads.
Smith rejected the suggestion that Stellar Lumens was effectively paying people to use its platform, saying: “There’s lots of reasons people use the platform – utility, the sheer joy of it. In the case of crypto, $25 isn’t going to entice your product forever.”
Smith added that it is not unusual for startups to offer users incentives to use their products. He cited the example of PayPal, which has admitted to paying early customers to use its product. PayPal cofounder Elon Musk has said the company spent as much as $70m on referral fees in its early years.
“It certainly worked,” Smith said. “This is probably, adjusted for inflation, about the same level.”