Premines are a weird subject in Altcoin City. In a nearby galaxy just a few months ago all premines were considered evil. I don’t mean Justin Bieber evil either. I’m talking about Adolph Hitler or Saddam Hussein evil! A ‘Dev‘ who proposed a premine of 2% was treated similar to the way Ariel Castro was when neighbors discovered he had three kidnapped women is his Cleveland basement.
Oh how times have changed! After the runaway success of Auroracoin, suddenly 50% or higher pre-mines were in fashion. Heck, I even remember not long ago a coin called STD (I shit you not.) This malodorous altcoin came equipped with a 75% premine AND an IPO, as well as the world’s worst imaginable coin symbol. Instead of getting laughed off the face of the planet, the Cartoon Coin Dev got paid! Sad news for investors, though, because of course the coin went absolutely nowhere after the launch.
After the Collapse of the CountryCoins, pre-mines fell back to a less popular status. Intrepid ‘Devs‘ suddenly needed a better excuse tham ‘air-dropping‘ the coins in order to justify their pre-mines.
Suddenly, the ‘Dev‘ of AsiaCoin came up with the best idea of all. Hide your premine in the code. (Either he invented the idea or copied the code of SHACoin, or he was the ‘Dev‘ of both.) His hidden premine had the distinct advantage of not being there at all when the coin launched. In fact he even touted this is a main feature and proof of his honesty.
In May The Surge Of FlashCoins Took Premines To A Twist
In May, larger hash power came onto the scene. Suddenly most coin ‘Devs‘ started touting small premines of .5% to 1%. However, because these were FlashCoins, the early block rewards were enormous and completely in favor of ‘early adopters.’ These early adopters were able to easily dump on an exchange. Generally the earliest adopter of all is the ‘Dev‘ and his inner circle of cronies. They quickly instamine as much coin as they can all the while pumping the price in earnest. Only one thing can happen after a pump - and that’s the dump. Massive pre-mines tend to equal massive dumps, especially in cases where you can’t trust the ‘Devs.’
Premines in the form of instamines can’t be stopped since FlashCoin have become a standard, accepted practice. The solo miners like it because they think they’re going to get a fair shot at early blocks anyway. In most cases, they couldn’t be more wrong. The high block rewards are bound to be gobbled up by insiders.
Premines And Instamines Are Required For Pump And Dumps
The funny thing about most coin ‘Devs’ is despite their desire to manage a global cryptocurrency they’re dead broke and don’t have a penny to invest in their project. They claim their premine is for ‘giveaways’ and more. Generally, though, the giveaways are bribes to exchanges for quick listings.
Without these listing, they won’t have enough volume and turnover to make any money quickly. To them altcoins launches are ‘get rich quick schemes’ in every sense of the word. Their coin efforts leave little to be desired. They are quicky copies of existing altcoins made with the sole purpose in mind of pumping the price as high as possible so they and their circle can dump and get out before the coin inevitably falls.
I think the next month or so will have an onslaught of even more creative premine excuses, or more hidden code that doesn’t build on the primitive SHACoin/AsiaCoin implementation.
Premines Aren’t Going Anywhere
When they’re implemented in an honest fashion, premines are a legitimate way for hard-working coin projects to raise necessary funds. For that reason alone premines will never become a thing of the past. Still, people need to examine premines in order to make sure you’re making an honest investment in a coin. It’s also okay to put your BTC into a quick pump and dump as long as YOU KNOW what you’re getting into. Being able to recognize launch tricks can save you a lot of money by helping you to make a more informed choice. If you buy at the peak of the pump, you’ll get killed on the dump. If you buy at the beginning of the pump, you have to know when to dump! If you fall in love with an altcoin you’ll end up being an involuntary investor. You don’t want that, and I don’t want that for you.
Instamines, on the other hand, are crap. FlashCoins are going to benefit a select few, and not the multitude - just like traditional industries that cryptocurrency leaders are claiming to ‘disrupt.’
What are some clues the premine will be used for long-term development:
- A trusted Dev team.
- A clear written explanation of what funds will be used.
- A functioning Block Explorer (not hosted by the project team) at launch.
- Communication while using the premine, including a public ledger.
Even this won’t always be enough, but it’s a great start. Just keep your eyes wide open when you’re in Altcoin City. Never flash a big wad of dough and don’t let people know you’re a sucker! If you do, bad things are going to happen.
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