Bitcoin Forum

I want to avoid flame wars between this or that altcoin so invite everyone partecipate to this discussion to avoid any direct attack to a specific coin using only examples and argumentations.

I have noticed that the community pay much attention to the fact a coin is premined but i haven't clearly understand the reason why this is necessarly evil.


I have understood that if few people controls the largest part of the whole monetary base is very bad for all the rest of people, but I'm not sure this is directly related to premined.

-Suppose to have an altcoin A that is premined but there are tons of way to get much coins for free without mining.

-Suppose to have another altcoin B that isn't premined but is insanely hard to get some coins using mining for a common user that cannot use a cluster with huge hashrate that only few people or companies can have.

Assuming that both altcoins are limited to a fixed max amount of mineable coins.

What is the scientific reason that should lead me to consider the altcoin A scam and the altcoin B fair?

You already noticed it: Considering a coin a scam only because it's premined is childish and serious investors should not do this.

Much more important is that the project is transparent about the use of the premine. Serious projects make clear the proportion of the premine and how it's used before an ICO or IPO is carried out. And they provide details about the development team, roadmap etc.

The proportion for the developers should not be too large. I consider it better if there is a model where the developers get continuous rewards for their works than a simple premine. There have been many cases where the "developers" sold their premined coins without writing a single line of code.

Premines that are distributed in the form of "airdrop" or "giveaway" are a good way to gain a larger user base. But if the proportion of the "airdropped coins" is too large, then there is a chance that many of the holders will sell as fast they can - the "Auroracoin effect".

Premine introduces the need to trust the developer(s) and causes centralization of funds which are two terrible things in crypto.
The premine holder can dump a huge amount of coins on the market at any time screwing with all investors be it ICO participants, miners, etc so premiend coins are risky.
Premine also means the devs get paid in advance before they even have to do any work other than cloning a wallet.
I'm not going to disect why paying anonymous people in advance is a terrible idea.

Devs should slowly get funded instead of a premine to motivate them not to abandon their coin. For example 1% of every coin going to a fund address.

I strongly believe if a developer believes he can create a successful coin he should fund it himself because let's be honest, most "devs" have no idea about how to make a coin and they are just experimenting with other people's money or just want to simply scam people.

In your example coin A has no floor value. Its value is completely arbitrary because it's free to create. And coins need value.
Just because someone convinces you that a handful of dirt is valuable it doesn't make it true.

But for coin B it costs to create (mine) them so there's a floor value, meaning miners won't sell it below what it cost them to mine.

"Insanely hard to get some" is a moot point. It only means that it's more scarce or more people are interested in it and therefore probably more valuable. You can't get a bunch of bitcoins for free and look at its price.
Also, it doesn't matter if you mine with 1 GPU or with a massive farm; the reward is proportionate to the hashrate. The more you invest, the more you get, it's that simple.

The problem is that mining a cryptocurrencies isn't affordable for everyone. A developers that premine its coin but start a transparent and proportionate distribution of mined coins to the crowd could grant more fairness that a developer that doesn't premine its coin but the largest part of the coin will be controlled by few people with an huge mining net that can reach insane hash power level as soon as the coin become a bit popular.

The measure of fairness should be related to distribution of the monetary base to people otherwise is only mining mobbing.

If despite I have an above the average PC I basically have to melt my motherboard to get few 0.00000coins and I'm forced to buy from some rich dude or some company that has a megacluster mining-net, this isn't fair distribution to me.

For starters who ever issued the pre-mine will likely be an MSB under FinCEN regulations in the United States either as an Exchanger or Administrator. https://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html (https://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html). If the proceeds of the pre-mine are sold in whole or in part to fund development of the coin then there is a very good case for at least an Exchanger status for the devs who created the pre-mine. If these devs are not registered as an MSB within the required period (I believe it is 6 months) then they are in violation of the law. If they register as an MSB then they have to do AML/KNC. So as far as I can see they are scamming the users, scamming the government or both.

Edit: Ripple had to pay substantial fines because of this. The fact that Ripple acknowledged it was a pre-mine was part of the settlement. https://www.fincen.gov/news_room/nr/pdf/Ripple_Facts.pdf (https://www.fincen.gov/news_room/nr/pdf/Ripple_Facts.pdf)

A premined coin isn't a scam, but when the premine dumps on the market and the coin is abandoned the same day, then it's a scam and experience has shown that the premine dumps more often than not. Sometimes the premine is traded out in a civilised manner or dumps months after release which doesn't make it better. A sensible investor would stay away from premine because it only ads risk and there is options for the devs available to pay themselves over time like in the code of devcoin or freicoin so a premine can actually not be justified. Exactly because these other options exist a premine is a red flag. Honest devs have other options to raise funds.

With all the respect but FinCEN can kiss my ass. Cryptocurrencies don't need government bullshit of any sort but a fair system that can work to exchange services and commodities at service of people in the real world.

Obviously if you premine a coin to have most of the monetary base for yourself or cheating the other users this is bad and the currency has no future. But my point is that premining used with a fair transparent distribution policy could be more fair than let the monetary base in the hands of big boys of cluster mining that can easily grab the largest part of the monetary base for personal speculation crushing the possibilities of all others normal users that with their little home pc cannot compete.

There is no such thing as a "fair transparent distribution policy". Coins come from mining. Mining is necessary to run a blockchain. I'm not a miner but i prefer buying coins from a miner instead of hoping for "fair transparent distribution policy" because that's just some scam-artistery normally. I've seen enough of these "fair distributions" over other avenues than mining. None of it was fair. Pow mining is the fairest distribution possible even if you're not a miner.

Remember: the miner did not create the coin. Letting the creator distribute his own coin "fairly" is an hilarious idea. You obviously have no clue about human nature.

In my humble opinion longterm pow-mining (no flash-mine or ninjalaunch bullshit) is the only fair way of distribution. Blockrewards should slowly fade away, not abruptly. Until 50% of supply is mined, should be at least 4 mionths or more. I'm talking currency (valid money) here, not tokens.

Just my personal minimum requirements to even look at a market .... everyone is free to buy into a premined coin and make some experiences themselves  :D

This make no sense. Suppose that I have An altcoin X and its monetary base is limited to N coins.

If I start to annunce the currency as public and put all these premined coins in a reserve wallet that cannot be used by me but is used by a service where each user can get freely a fixed amount of these coins. This would be way more fair than let all the monetary base to strongest miners and there are tons of technological way to avoid that developers or greedy people can scam other users using multiple account getting more coins that allowed.

I find hilarious that so many people consider fair a system where basically the rich who has insanely powerful miner cluster get all the coins and the rest of the people can only melt their PC to grab some little crumb and are forced to buy the coins from these few people.

The only way to make fair the mining approach in the real world is creating a system that doesn't depend on mining power but assign a limited number of coins to each miner wallet that must use a real identity to assure the net He is not faking the system using multiple miner accounts.

AndreaF Glad you asked this question.

What seems to be lost on 99% of the current 'in it for the fiat' crypto community is the entire point of a peer to peer currency is to take the money changes out of the equation (in fiat the money changes being the bankers, who get there cut in creating and being a middle-person in transactions).

now if devs start taking their premine 'cut' they become nothing more then the new breed of bankers, and it no longer becomes a viable alternative to fiat.



 

The huge difference is that

- if developer premine and choose an unfair way to distribute the monetary base, everyone can see this and its coins worth nothing, He alone cannot impose any value.

- If developer premine and choose a fair way to distribute its coin. The monetary base could have a fair equilibrium among people.

- If developer doesn't premine and the mining is strictly relate to hash power. Few rich people will control the monetary base, in the same way central banks do (nd even worst). No fairness in this.


This is my point.

if u knew how many pow coins are scams, only the tehcnology matters. some miners are pissed they cant instamine with botnets anymore thats all.

It's not a fair distribution because there will be people claiming coins more than once. Basically the one figuring out how to successfully multi-claim is coming out on top. Also since you, who launched the coin will have made the claiming-mechanism you can cheat it too.

It's just a whacky game too.

I still prefer buying from a miner where i have blockchain evidence when and how the coin was created with what difficulty and how hashrate is distributed and so on ;)
Pow distribution is superior in transparency.

Also mining takes knowledge and costs money. It's not like the miner is getting it for free. Maybe you better look for karl-marx-coin, i think.

Here, have some free tits and be happy: https://bitcointalk.org/index.php?topic=1502314.0

As I have said there are tons of way to prevent same people claims coins more times using the blockchain, way more ways than you have to avoid few powerfull rich people grab the biggest slice of monetary base with unruled mining.


The mining of all cryptocurrencies that I know depends on Hashpower. And all normal people cannot mine with the same hashpower of the people that has large serverfarm that can fire TeraHash of power as soon as an altcoin became a bit popular creating an unfair marked where few people grab the largest slice of monetary base.... basically the same problem of coins created by unfair developers with the only difference that in a case developers and their friends grab the largest slice, in another case big companies and rich people with the access to ultra strong computational power grab the biggest slice.

This is an huge problem that needs attention by the community that unfortunately seems completely ignored.

I would concur that many if not the majority of non premine coins are also scams.

I would also concur that premine in order to fairly distribute wouldn't violate the avoid money changes principle p2p is founded on (however i am yet to see a fairly distributed crypto).

 

You really are new here. Make some research. There were all kinds of distribution mechanisms, i have really seen a lot. I watched at least 600 or more coins launch. I do know.
Read my lips: you. can. not. prevent. multi-claim.

And sure as hell, you're a socialist.

Also there is no such thing as "unruled mining" as all mining is ruled by code.

You are proposing a centralized trustbased method instead of using a decentralized trustless method just because you envy the miner for his rig that you don't have. lol

Rent your hash then.


further edit: also if you would launch a coin why would you waste moneysupply on air? Coins are the reward for securing the chain. A premine does not produce any security. By creating moneysupply out of thin air you take away future security of the chain but that's probably too much for you to wrap the head around.

If mining is fair for all the miners and the competition amongst them is real, then pow-distribution is superior to all other methods and i'm happy to buy from the miners in these circumstances all day.

You think fairness means you get something for nothing.
I think fairness is equal opportunity and when someone gets something for nothing someone else gets nothing for something.

Do you see the issue with the devs having mined hundreds of thousands of dollars worth of coin before it has any difficulty? Basically it seems like they just want to make up a magic currency, get all of it or a majority to themselves and then let the users pay for it from them. It's a monopoly essentially.

that is right, but if you have followed the whole discussion I want to highlight another issues that damage the fairness of the cryptocurrencies, that isn't the premine itself but unfair distribution that there is for both premined and not-premined cryptocurrencies if aren't adopted others policies




I have already said why leave the mining capability enterely dependent on hashpower without additional rule to prevent unfair distribution cannot grant any fairness.
Cryptocurrencies should be a more fair alternative to bank controlled money.... if all the money are controlled by few big guys the cryptocurrencies became same shit as other regular currencies and also worst.

The only thing that give value to cryptocurrencies is the trust, more fair is its their distribution higher will be their value.

And just to be clear I'm not a socialist I'm an anarc-darwinist. Everyone must be set in the same position at the start and gain wealth and power with his own abilities not because of inherited wealth and initial benefits of his position. ;)

there is no such monster as a scam coin. People call them scams because they have no patience and cant wait to see how the coin develops.

There are definitely coins made just for the sole purpose of the devs to offload as much as possible on people and then ditch the coin...ICO scams used to be a big problem but now generally escrow is the only way to do an ICO because of all the scammers ;). There is some meme of one guy getting BTC60 and then laughing at all the people he scammed with his fake coin.

That meme is priceless. Ive seen it say way more then 60 btc. Back in the day that dude made his rounds on many a thread.

https://ip.bitcointalk.org/?u=http%3A%2F%2F4.bp.blogspot.com%2F-42zeUQixANw%2FU1U568tA_sI%2FAAAAAAAALJQ%2F_4xDg8gn5xM%2Fs1600%2Fconfetti.gif&t=564&c=N2CuzBhy5h8ywg

He scammed 167btc with a presale on that coin, then posted pictures of him spending the money. That one was pricelss. lol

Because the founders will be pretty much in control of the market, and when they decide to get out of the coin, the market will crash and therefore the coin is dead and nobody will ever use it.

Especially the coins which adds nothing to the crypto scene. They are the shittiest of the shitcoins.

Which is a perfectly valid reason to avoid a pre-mine, and the government entanglements it brings.

because of thee dangers they are having!
when you invest in an altcoin the only thing that you care about is the profit and the future that it goes up in a pump.
but when there is a huge premine like eth or many other coins there is always a big risk that the premine owners will dump their coins on the market to get out and crash the price again like eth

You are completely out of touch with crypto.

Every single free distribution model can be (and is being) exploited and that is a fact. This is why we have a such a difficult and safe way of creating new coins called proof of work.

And as I said earlier, there's no such thing as all coins going to superminers. Every element of the market gets just as much coins as they invest in either electricity and mining time or BTC (buying on exchange).
There's no "few powerful miners controlling all", everyone has a fair chance to buy mining equipment and use it. You're argument is like saying some people have more money to invest so crypto is unfair.
In essence, your superminer argument is short sighted and even childish.


You do realize it's not 2012 anymore, right? CPU mining is long dead.

This is news to me. I have found blocks using a CPU in 2016.

Satoshi Nakamoto premined over 1,000,000 bitcoins, but you'll NEVER read that on Coindesk. lol

The value (pure and simple) of any cryptocurrency is in its network effect. Focus on network effect and forget about these silly notions.

~~

btc wasn't premined. It was just stealthlaunched and ninjamined on very low difficulty.

LOL yes this is the meme picture that was posted by the scammer with a big red 167 Bitcoin below it. So priceless ;D one of the biggest scams in the history on here I think!

Not even close to the biggest scam. Just the most bold one in the aftermath.
I think the biggest proven scam so far was paycoin with his 150 million marketcap, right?

Also several potential scamcoins are still on high value on CMC.

Well, yes I was monitoring Paycoin every step of the way. I almost actually got into it as an investment funny enough. As for the profits I'm sure they made off with more than 167 Bitcoin but we can't really know for sure. The marketcap can be 1 trillion for all I care and if nobody is buying it in volume that market cap means nothing lol

You try to negate the reality.

1) It's a FACT that few people can get access to ultra-powerful hash miners
Most of people CANNOT invest tons of money in superminer for speculation, I have a high end home PC pretty expensive and if I compare ,u hashrate to top miners of most popular pools its power i light years distant not even in the same universe.

2) The concept of miners contribute to the currency has sense when the hash power is proportional to the blockchains needs, if there is overmining speculation becames a way to grab as much coins as possible. This concept is very easy to understand. There is monstrous power used in most popular coins mining for few transactions. So say that is only a meritocratic reward is bullshit, It's a gredy game for who has most power.

3) Is for you is fair that few richest people that can affort mining cloud controls most of the money, you have to consider fair also that original developers control most of the coins. To me fairness means a proportional distribution among people... According to you isn't clear what means and what is the "merit concept".

Can you tell me why the next person should pay money for a coin that you got for free? Is that fair for the person that buys that coin from you later? Please explain.

Sure, but CPU mining is irrelevant next to GPU and ASIC mining.


Fair means everybody can mine it not that everybody gets the same amount. What you're talking about is socialism.

You basically have an issue with everyone who invests more than you do while you could invest as much money as you have and become a superminer yourself.

premined altcoins are bad or even bad enough to be considered as scam coins because it gives control over the altcoin to a few people who own the premined coins so they can swing the price as they see fit and be sure that the price will always swing in their favor not the rest of us as investors.

WOW you haven't understand anything of what I have said. If someone create a fair distribution of premined coins obviously this distribution must be FREE so this fair distribution can be the kickstart to create a fair virtual monetary system for all people. This is what I'm saying.

- If developers premine all monetary base and sell to other users is UNFAIR since the developers get the control of the monetary supply
- If developers doesn't premine and the mining is based only on hash power, this is also UNFAIR, since the big companies that can use server farms to mine the coins take the control of the monetary supply.

You didn't answer the question where a coin that was issued for totally free derives its value from and why anyone would ever pay money for it or why it would be fair to take money for something you received for free. Please answer that question.

Also you seem to be unable to understand that even if the coin is distributed for free it can be a scam.
Also there is no such thing as a fair central distribution.

Maybe you would want to send privatekeys in the mail to 6 billion citizens of the world for free, maybe then i'd be interested but i doubt you can raise the funds to do that.

To me you make the impression of someone who's testing the waters for their next premine-coin. Save yourself the headache. It's not gonna fly.

Trust is what gives values to a virtual currency or any currency that isn't based to a physical commodity and is based on how considered fair is the system. If people accept that the system can work and is fair. If the monetary system is democratic and accepted. Where is the scam? If someone not accept the system nobody force him to exchange services for cryptocurrencies.
  
Dollars are paper that worth only some cent, but people accept their value so you can use them to buy.
This would be a system way more fair if developed correctly.

Yes. I got the same exact impression.

Test the water for next premine coin?? This is more ridiculous than reptilian-jew conspiracy theory.

I'm talking about the REAL concept of FAIRNESS for both premined and not-premined coins and still haven't received a valid reason why buy coin from mining mobbing of big whales should be considered "fair", because this is what happens when who has more hash power can get most of monetary supply only for speculative purpose.

They have to buy a huge amount of hardware to be a whale...so they earned it or somebody else earned it for them. The rich always get richer, it's something you can't stop in the world. It's fair because even if they inherited money then the person who had the money had to work for it. There's a valid reason for you.

This isn't a valid reason because means accepting cryptocurrency world as a simple facade for standard money ....and nothing more than this.
No revolutionary system to fight big corporations, lobbies and unfair wealthy and power allocation. Basically only a big joke to waste energy in mining and gain from scam bubbles.

Cryptocurrency potential is far more greater than this.

Decentralization homeboy. If you are true in your belief of a purely P2P exchange without an centralized institution, then a premine is against the premise as it sets up an entity that mined the tokens before anyone else could. They became the institution crypto was supposed to circumvent.

There are innumerable ways to launch a cryptocurrency. The most vital ingredient is transparency.

When a currency is launched there are initial costs and fees associated with maintaining the network. So each evaluation must be made separately. There is no black and white.

Transparency, resilience, community, and kindness are the most vital ingredients in a sustainable currency.

~~

Absolutely, No. Because the premine that I'm saying implies a fixed free fair distribution. There is no centrality because in this scenario the premined coins aren't a property of developer or another entity, but a public reserve that has the only purpose to be the most decentralized possible with a proportional distribution among people, and the currency starts to work only after most of premined monetary supply is distributed. It's only a fair start mechanism to make the currency REALLY distributed, there is no centrality at all in the hypothetical premined cryptocurrency of my sample.

Premine is OK as long as it serve its purpose, white paper and transparency is also a plus when it comes to this, they are considered as a scam if the premine is way too big just for the start up the program.

I think you're assertion of "absolutely" is invalid. However, I understand where your head is at.

Premined like coins who have a 2% premine for example or
premined coins like ICO's who are 100% premined ?

Can we all do basic math ?
Which number is bigger and there for worse (scammier) ?

I love how you all try so damn hard to play dumb about that LOL

Couldn't agree more with that. Transparency is key. People can then make their own choice after that.

As a newbie on altcoin with no mining rig to speak of premine with give away caters to newbie like,people are more attracted to coins that are easy to get and the distribution is wide..

But then you have the dev which is only making money because he has the most of the coins...you will never have a chance because not only will people dump their giveaway but the dev will also sell his huge coin stash.

Premine, and ICO are the best coins ever.

These area all true there are pros and cons on premined,in my opinion premine was created for profit but it is the easiest way to generate followers of your coin because it's been used as give away and to stabilize the development of the project,but it all goes up who are the devs who are offering premined some of them are newbies..

that's it in a nutshell ... adding to the crypto dictionary ;)