The *PRE-MINE*....is this worse than not knowing?

[jubalix]

It appears that almost all coin chains are to some degree pre mined explicity or de facto, either by ignorance of the project, or lack of understanding at the time, access to hardware, or obscure tactics.

BTC for example had a defacto premine. Not many people new about it at the start, and even then, many who did did not understand it. Further it was (and still is) a huge risk. Eg Satoshi and early adopters could have wasted there collective time. Yet they mined away...probably at a large loss.....at the time. I am not casting this as wrong or bad, rather probally well deserved due to the risk of what they were spending their time on. The issue is now however its hard to price in the risk to the chain, as we do not know clearly how many BTC's are tied to one entity.

It may be that all coins even if a coin is announced weeks in advance and *not premined*  are still subject to a relatively select few to mine, or defacto premine.

Look at the BTE, FC, TRC,LTC who but the first on the chains really had it easy as a function was this chance/risk access to hardware.

In fact it maybe that a known premine, eg IXCoin or NovaCoin may provide a form of stability, with the certainty that there was an amount secured by one entity and being able to price in that risk, rather than believe that it was not premined when in reality it was just in stealth mode by the first few. It becomes hard to price that in as you do not know exactly how much is controlled by one or a few entities, and you may well get this wrong.


I think that premine suffers from the similar stigma as "insider trading". It was pointed out to me by a Law Prof, that there was no such thing as insider trading, as no one knew the future with 100% and rather what gets called "insider trading" is rather quicker allocation of capital with attendant risk.

I feel that the degree of premine is simply another parameter in the variables for what constitutes a good coin, eg pay out rate, difficulty algo, upper limit of coins, speed etc.

tl;dr, confirmed premine lets you price that in. Defacto premines usually present anyway, and you can't price that in well.

[Elwar]

The guy who took bitcoins for pizza creates far too much uncertainty in the market.

Did he immediately turn around and use it for hamburgers? Or did he hoard it? We do not know this and thus live in daily fear of such an unknown.

[Nancarrow]

If I understand you correctly, I agree with you. The fact of premining itself, or even how large it is, is not really an issue for the usefulness of a currency. What's crucial is that everyone using the currency has as much information as possible. This is why I got so excited by Sergio Damian Lerner's thread in which he analysed the blockchain to come up with a pretty good guess of which blocks were mined by SN. What we still don't know is whether those coins are capable of circulating, or lost forever, and this would be a real help in stabilising Bitcoin's value. I'm sure it wouldn't kill Satoshi to pop up, say "yeah those are mine, they're still spendable, here's me spending 0.1BTC from each of the blocks with prime number depths as proof". In the mean time those BTC (order of about a million?) are a bit of an elephant in the room.

[Nancarrow]

The guy who took bitcoins for pizza creates far too much uncertainty in the market.

Did he immediately turn around and use it for hamburgers? Or did he hoard it? We do not know this and thus live in daily fear of such an unknown.

You're being facetious but unreasonably so IMO. We could tell whether he used or hoarded the BTC by looking at the blockchain. Also the value of the pizza (10000 BTC? from memory) is a couple of orders of magnitude smaller than SN's holdings, so has correspondingly less market impact.

[jubalix]

If I understand you correctly, I agree with you. The fact of premining itself, or even how large it is, is not really an issue for the usefulness of a currency. What's crucial is that everyone using the currency has as much information as possible. This is why I got so excited by Sergio Damian Lerner's thread in which he analysed the blockchain to come up with a pretty good guess of which blocks were mined by SN. What we still don't know is whether those coins are capable of circulating, or lost forever, and this would be a real help in stabilising Bitcoin's value. I'm sure it wouldn't kill Satoshi to pop up, say "yeah those are mine, they're still spendable, here's me spending 0.1BTC from each of the blocks with prime number depths as proof". In the mean time those BTC (order of about a million?) are a bit of an elephant in the room.

Exactly...you understand my point. 

The premine may also garner a bad rep because the usual suspects who get on chain early (chain junkies) can not do this to the same degree and are really complaining they could not "premine" themselves.

[BTC Books]

It appears that almost all coin chains are to some degree a pre mined, either by ignorance of the project, or lack of understanding at the time, access to hardware, or obscure tactics.

BTC for example had a defacto premine. Not many people new about it at the start, and even then, many who did did not understand it. Further it was (and still is) a huge risk. Eg Satoshi and early adopters could have wasted there collective time. Yet they mined away...probably at a large loss.....at the time. I am not casting this as wrong or bad, rather probally well deserved due to the risk of what they were spending their time on. The issue is now however its hard to price in the risk to the chain, as we do not know clearly how many BTC's are tied to one entity.

It may be that all coins even if a coin is announced weeks in advance and *not premined*  are still subject to a relatively select few to mine, or defacto premine.

Look at the BTE, FC, TRC,LTC who but the first on the chains really had it easy as a function was this chance/risk access to hardware.

In fact it maybe that a known premine, eg IXCoin or NovaCoin may provide a form of stability, with the certainty that there was an amount secured by one entity and being able to price in that risk, rather than believe that it was not premined when in reality it was just in stealth mode by the first few. It becomes hard to price that in as you do not know exactly how much is controlled by one or a few entities, and you may well get this wrong.


I think that premine suffers from the similar stigma as "insider trading". It was pointed out to me by a Law Prof, that there was no such thing as insider trading, as no one knew the future with 100% and rather what gets called "insider trading" is rather quicker allocation of capital with attendant risk.

I feel that the degree of premine is simply another parameter in the variables for what constitutes a good coin, eg pay out rate, difficulty algo, upper limit of coins, speed etc.

tl;dr, confirmed premine lets you price that in. Defacto premines usually present anyway, and you can't price that in well.

jubalix -

Words matter - and despite your waffling ("defacto premine", "to some degree") your continued use of the word 'premine', applied to bitcoin, is disingenuous at best.

Ripple is totally premined.  The alt-currencies you mention were premined.

Bitcoin was never premined:  it was not anything even close.  Not even close.  Plenty of people were aware of it, and plenty mined.  It was the only cryptocurrency of which I'm aware that began its life in complete transparency, fully open to any and all; for those with eyes to see.

Your continued insistence in using the term 'premined' does both bitcoin and you a great disservice.

[jubalix]

It appears that almost all coin chains are to some degree a pre mined, either by ignorance of the project, or lack of understanding at the time, access to hardware, or obscure tactics.

BTC for example had a defacto premine. Not many people new about it at the start, and even then, many who did did not understand it. Further it was (and still is) a huge risk. Eg Satoshi and early adopters could have wasted there collective time. Yet they mined away...probably at a large loss.....at the time. I am not casting this as wrong or bad, rather probally well deserved due to the risk of what they were spending their time on. The issue is now however its hard to price in the risk to the chain, as we do not know clearly how many BTC's are tied to one entity.

It may be that all coins even if a coin is announced weeks in advance and *not premined*  are still subject to a relatively select few to mine, or defacto premine.

Look at the BTE, FC, TRC,LTC who but the first on the chains really had it easy as a function was this chance/risk access to hardware.

In fact it maybe that a known premine, eg IXCoin or NovaCoin may provide a form of stability, with the certainty that there was an amount secured by one entity and being able to price in that risk, rather than believe that it was not premined when in reality it was just in stealth mode by the first few. It becomes hard to price that in as you do not know exactly how much is controlled by one or a few entities, and you may well get this wrong.


I think that premine suffers from the similar stigma as "insider trading". It was pointed out to me by a Law Prof, that there was no such thing as insider trading, as no one knew the future with 100% and rather what gets called "insider trading" is rather quicker allocation of capital with attendant risk.

I feel that the degree of premine is simply another parameter in the variables for what constitutes a good coin, eg pay out rate, difficulty algo, upper limit of coins, speed etc.

tl;dr, confirmed premine lets you price that in. Defacto premines usually present anyway, and you can't price that in well.

jubalix -

Words matter - and despite your waffling ("defacto premine", "to some degree") your continued use of the word 'premine', applied to bitcoin, is disingenuous at best.

Ripple is totally premined.  The alt-currencies you mention were premined.

Bitcoin was never premined:  it was not anything even close.  Not even close.  Plenty of people were aware of it, and plenty mined.  It was the only cryptocurrency of which I'm aware that began its life in complete transparency, fully open to any and all; for those with eyes to see.

Your continued insistence in using the term 'premined' does both bitcoin and you a great disservice.

hmm lets dissect this response.
75% ad hominem
25% semitoics....
0% on the pricing

I am not saying a pre mine is in anyway bad, in fact quite the opposite. You *seem* to injecting this connotation.

the thrust of the argument is why is a premine bad in any way? Does not an open premine allow you to price in more accurately.

The fact that a *Large* proportion of BTC is just siting there suggest a defacto pre-mine,

If you don't like the semiotcs I use....well that's ok, in-vent a new term that conveys the content better and see if it catches on.

I am also not sure that a real lot of people knew about the BTC project in any meaningful way when it was one or two laptops mining.

[jbreher]

Just. Doesn't. Matter.

What's the worst that can happen? A big gob of coins get dumped on the market all at once. This leads to a drastic drop in price. Followed by the return to an inexorable upwards trend, until equilibrium is reached at a date now delayed by a day, week, month, unlikely a year. And those coins can never again be dumped.

Bitcoin user unaffected.

[BTC Books]

I am not saying a pre mine is in anyway bad, in fact quite the opposite. You *seem* to injecting this connotation.

the thrust of the argument is why is a premine bad in any way? Does not an open premine allow you to price in more accurately.

You don't need to say that premining is bad in any way.  The instant conflation with those crap currencies which have been premined does that for you.  And quite neatly as I imagine you're aware.

And I am not 'injecting' anything.  I state baldly - premining is not a good thing for trust.  Bitcoin was not premined - not even in a remotely defacto sense - and I trust it.

As for a term that is appropriate:  early adoption has been used for years, and is accurate not only in re a strength of bitcoin (the strength of those concerned creating the infrastructure for their own wealth), but the weakness of the alt-currencies as well.

[jubalix]

I am not saying a pre mine is in anyway bad, in fact quite the opposite. You *seem* to injecting this connotation.

the thrust of the argument is why is a premine bad in any way? Does not an open premine allow you to price in more accurately.

You don't need to say that premining is bad in any way.  The instant conflation with those crap currencies which have been premined does that for you.  And quite neatly as I imagine you're aware.

And I am not 'injecting' anything.  I state baldly - premining is not a good thing for trust.  Bitcoin was not premined - not even in a remotely defacto sense - and I trust it.

As for a term that is appropriate:  early adoption has been used for years, and is accurate not only in re a strength of bitcoin (the strength of those concerned creating the infrastructure for their own wealth), but the weakness of the alt-currencies as well.

let me re iterate, I am saying a clear and stated pre mine may be a benefit as it allows risk to be priced in more accurately.

[Meatpile]

Before you were born there were richer people than you, after you die there will be richer people than you, whats the difference?

[Elwar]

after you die there will be richer people than you, whats the difference?

Not if I can help it!