Comment by insette | Hacker News Reader

Comment by insette | Hacker News Reader

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Are you ready for a great counterexample to your "knowledgeable" friend's claim?

Look at Ethereum on CoinMarketcap.com.

Next, find Counterparty.io on CMC. You'll have to scroll to page 2.

What you'll notice is Ethereum is worth over $100,000,000,000 today while Counterparty is worth about $100,000,000. It's a difference of 1000X.

Importantly, Counterparty wasn't premined whatsoever (wow!!11). Conversely, 70%+ of all ETH which will ever exist was explicitly premined by the Ethereum Foundation and investors in the Ethereum ICO. At this point, in retrospect it would've been WAY better for the founders of Counterparty to premine the coin and ICO it to smithereens. At least then they'd have millions in capital to hire people with, while the founders would be heavily vested in the coin.

But this didn't happen, and since then we've learned real world investors don't care at all about fairness in coin distribution. It isn't like any coin, to include Bitcoin, is "fairly distributed" by any reasonable definition of fair. Something like 90% of all BTC is controlled by less than 10% of all Bitcoin holders, meanwhile billions of people don't own any BTC whatsoever.

Of the top 10 coins on CMC, 70% are premined: Ethereum, Ripple, Cardano, NEM, Neo, Stellar and IOTA. Of the top 20 coins, 75% are premined.

IMO the only conclusion we can draw from this is cryptocurrencies are de facto bearer share companies, and investors in these companies actively seek out coins where the founders of the company scoop up a good amount of the pseudo-equity for themselves. It vests the founders in the project, and gives them a source of funding, if indirectly.

While I for one really do wish your "knowledgeable" friend was correct, alas.

Pre-mining is unpopular because when the first Bitcoin forks appeared, it became the modus operandi of scammers abusing the markets and the honest miners burning resources to operate the network.

I think it is a complete different story when a project has a pre-mine that is held by a formed legal structure with a fiduciary duty to spend the resources on the project's development. Obviously in pure proof-of-stake systems, a "pre-mine" is de facto the only path you can take.

Fairly distribute tokens is a problem that lacks a completely satisfying solution. It should be noted that "fairly" doesn't mean "evenly".

A fair distribution is one that lets the demand shape the final supply of tokens. In other words, you let people take the position and degree of investment they want to take without manipulating the supply to force pressure the demand.

Writing this comment gave me pauses, I hope that I conveyed my points clearly. Let me know if you need me to clarify anything.

> Obviously in pure proof-of-stake systems, a "pre-mine" is de facto the only path you can take.

It's very possible for project founders to forego a premine, even in pure proof-of-stake systems. All they need to do is determistically distribute coins in proportion to the funds raised in an ICO. Ofc, this would mean the project founders themselves have to fund their own ICO with their own money, and so in practice this is exceedingly rare.

I have a feeling certain people consider ICOs to be premining by definition.

Premining has a very simple technical definition: premining is the act of hard-coding the distribution of coins into a distributed ledger prior to the ledger's public debut.

Unfortunately there are plenty of prolific high-ranking members of the cryptocurrency community who accuse coins which are explicitly NOT premined by any technical definition, of being premined. Many of those coins can only be accurately described as "ninjamined" or "cripplemined" or "instamined".

Admittedly, some do consider ninja/cripple/insta-mining as being on the same spectrum of a premine, in that the end result is essentially identical. But this is a bit of a slippery slope, in that it opens up all coins to "premining" accusations, and then the simple technical definition above loses all meaning.

For example, many have speculated Satoshi Nakamoto must've been running a network of 20-50 Bitcoin mining servers prior to the launch of Bitcoin, given the blockchain evidence we have of Satoshi's hashrate maintaining consistency from Block 0 onwards. Is this a ninjamine? If a ninjamine = a premine, then Bitcoin is arguably premined by this definition. So you can see it's not very meaningful to diverge from purely technical definitions.

Ethereum epitomizes the technical definition of premining: their ICO raised BTC on Bitcoin's blockchain, and the founders of Ethereum initially hard-coded all ETH owed to their Bitcoin-based ICO backers into their blockchain prior to its public debut. The Ethereum Foundation premined still more coins on top of this.

But this doesn't necessarily mean all ICOs are premined, although I don't personally know of any ICO which doesn't exhibit some amount of premining; at minimum the project founders usually scoop coins in a premine on top of an ICO, Ethereum-style.

If you have a genesis block with a hard-coded initial allocation of tokens, to me that counts as a premine.

Now I agree that you can make that premine "fair" and that there is some semantic cleaning to do.

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