Bitcoin Forum

I just wanted to get everyone's thoughts about the notion of premining alt-coins or having large initial superblocks that are mined by developers and/or early adopters? Is it beneficial or detrimental to the coin, and do you have any ideas on how to strike a balance?

I can understand why premining is looked down upon by the community since it potentially devalues the currency even before it gets off the ground. The common notion is that it's a pump and dump scheme by the developer(s), and if a coin starts off with this sort of stigma, chances are that the future of the coin isn't going to be promising. This turns off miners, and for a coin to succeed these days, the initial stage of engaging with miners to build up the hashrate and network stability is critical.

On the flipside, I can see why premining would be necessary in order to help build the ecosystem with incentives or having bounties in place. I think everyone would agree that part of the formula to a successful crypto currency involves having strong developer support. This breeds confidence in the long term outlook of the coin when the ecosystem is growing and there are tools in place to help make adoption of the coin easy and accessible. But I see that the fear many have is that these developers and those that receive these bounties would immediately flip them on the exchanges and cash out, flooding the market and therefore driving the value of the currency down. Also, if they cash out early, they no longer have the incentive to contribute and do what they can to help sustain the currency.

So this got me thinking: why not treat these incentives and bounties similar to vested stock options within a startup company? In other words, benefactors would not be able to access these funds and cash out until a given amount of time (ie. 6 months) has passed. More about this below.

I don't think that there's a clear cut solution that would appease everyone, but here are my thoughts. I believe that the foundation should be built on transparency and trust. A reasonable premine of 1% of the total amount of coins would be acceptable upon the condition that a public ledger is kept to detail how the funds are being allocated. This strikes a balance in that it provides the funds necessary to kickstart the ecosystem while providing accountability.

To address the worry that the benefactors of these funds would then flip them on an exchange to cash out, these funds would instead be deposited into a separate wallet in which they do not have access to the private key until it has been fully vested. The public key would be available in the public ledger for people to view the balance in a blockchain-like explorer tool to make sure everyone stays honest.

What are your thoughts and suggestions?

Full disclosure: I'm developing an alt-coin. This post was meant to start a conversation and get your thoughts to help shape not only this coin, but the future of all alt-coins.

Hm.

The community is against any pre-mine whatsoever. The Nugget (also in development I think) plans to take a cut once a coin is mined. That said I'm not against super blocks, but you don't want them too high otherwise you'll draw the wrong kind of attention. In my opinion it's going to depend on how you treat the smaller miners.

i reckon what could be done, is a small amount premined, the coin launched with a high diff to prevent instamining. Then the whole premine could be used as something like stocks or shares, and sold off, to everyone. This would then build a price for the coins, and a userbase from the beginning, The dev's would then have some money to work with either by the head dev getting the money from the premine or someone who the majority trusts to hold the money recieved

YOLO

A high initial difficult cuts out ALL of the small timers because then you need a $5000 rig just to start off with. What's the point? I might as well just stick with a centralized currency.

not really, have it high enough to stop instamining, but not so high that smalltime miners cant mine, OR do a better one and move away from scrypt to something that isnt gpu mineable yet

The biggest problem today is these massive premines like 1M, but no, "dev will not sell or dump on an exchange"! They could write books as to why their premine is more just than the next guy's. They give out 5K here, 10K there, pools faucets, whatever. In the end they still have 950K.  I'm not saying that my casino is great or anything, but I've spoke in the past just asking for a normal donation or even a semi-loan for a house stack, and they replied something like "are you crazy!". I bet they reply this to other people too offering services. Services their premined coins were supposed to be supporting.

They rather let coins die.... and they died alright :) (not implying that my casino could have saved them, it's the general idea)

agreed

Great points guys.

vinne81, I agree with you regarding the need for contributions to services. That's something coin developers fail to grasp. Without integration into these services, new coins will fall flat if adoption doesn't pick up early on.

So to ammend my $0.02, the vested "stock" idea would apply to individual contributors such as developers and others that contribute to the growth of the coin. Direct contributions would be made to services to spur integration and adoption. There's more detail that needs to be hashed out for certain cases, but that's a start.

What's the general consensus for the public ledger idea to help with transparency? My hope is that the public ledger + vested "stock" idea would build trust through transparency.

It's funny, people are against pre mines, yet my coin, for example, is alive and well, solely because I have been able to do huge give aways, and pay bounties for services to be created for it. Like any product or commodity, you need a starting capital....

Your coin being?

^mastercoin

Lemme know if there is one!


You wouldn't need that if you could discourage the larger miners from insta mining. The reason why you have pick up is because you have provided a back door to allow more people to take part. It's not really a solution to the problem that you're acting effectively as a central bank.

sha3 or scrypt jane? make the n of scrypt jane lower than 1024 i think so it wont be gpu mineable

SHA3 isn't even out yet >.<; I'll take a look into scrypt jane though thanks!

sha3 isnt out yet but its going to be keccak

Anyone who has a problem with a small pre mine, has never coded and released a coin. Period.

Depends on how small. My problem is more the difficulty. Premines usually raise the difficulty be default and most tend abuse the damn system. To be perfectly honest you could pre-mine one coin and simply divide it into smaller and smaller pieces. I'm not sure if anyone would begrudge one coin which is usually a very small amount of coins from the total, not 20 - 30% of the total pool.

That said, there are 'other' ways of recouping money which also have their own advantages and disadvantages. Most pre-mine coins appear to fail the moment the miners realize what's been going on. I guess it depends on the openness of the developers and how they interact with the mining community.

 agree. 1 to 2% is a fair amount, I think. My pre mine was less than 1%. It's very complicaTed to change the starting diff. Having an starting block reward of 0 and slowly ramping up to full block
ward is the best way to do it. And, super blocks, are just dumb

I guess superblocks are good for early starting miners, but I don't see the advantage to be honest. If you're there early then you'll be able to get the blocks quickly enough anyway because fewer people will be around. It's really the same problem with the difficulty except a different way of doing it.

 better way, would be to start the superblocks further into the block chain, say around 10,000 blocks or so, otherwise, your just giving bot nets and huge, lownlatency miners, millions of easy coins. Diff will be higher, and, they will spread out more evenly. A pool may even be setup quicker. See, the main goal, for a coin starting out, is to have a lot of people, will a nice bit of your coin in their wallet, rather than a select few, holding a majority of the coins. The more people who have your coin, the more people who are invested in it, and want to be able to trade it. The mob rules, as they say

Zas, I see your point about the astronomical rise in difficulty from early mining, and how it could turn off latecomers. The question is whether or not the coin is designed to reward early adopters or make it somewhat fair for relatively late adopters.

I like digitalcoin's fair launch policy, how the reward per block starts at 2 and works its way up to 20 at blocks > 8640. Early adopters would still be able to amass a number of coins but since it wouldn't be at full subsidy, my thoughts would be that difficulty wouldn't spike as fast until it reaches the full rewards per block. But by that time, the coin would be been released for a few days, giving more people opportunity to start mining it while the difficulty is low.

Like Hydroponica says, the more people that have possession of the coin, the more invested they are in it.

Thoughts?

Isnt Copperlark Sha3?

Yes, it is.

Guess Satoshi never coded or released a coin.

you have a coin?

Zas, do you have any links about the Nugget?

Thanks guys for all of your input. After much thought, I think the right way to go about it is to not premine at all. I like how coins like digitalcoin operate -- how they have to rely on the community for donations. It's a gamble, but chances are if your own community doesn't support you, the coin doesn't have any long-term prospects. It's a gamble that I'm willing to take.