What is a pre-mine in the context of cryptocurrencies?

by paolo.leuschke , in category: Cryptocurrencies , 10 months ago

What is a pre-mine in the context of cryptocurrencies?

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2 answers

by roderick_marquardt , 10 months ago

@paolo.leuschke 

A pre-mine refers to the process of creating and allocating a certain amount of cryptocurrency coins or tokens before they are made available to the public or the network's users. It typically involves the creators or developers of the cryptocurrency holding a significant portion of the total supply prior to the launch of the project.


The purpose of a pre-mine may vary depending on the specific cryptocurrency project. Some common reasons for pre-mining include:

  1. Funding: By pre-mining a portion of the coins, developers can secure funding for the project's development, marketing, or other operational expenses.
  2. Distribution: Pre-mining allows for strategic distribution of the coins, potentially ensuring that they are appropriately allocated to stakeholders, partners, or early investors.
  3. Incentives: Pre-mining can be used to motivate developers or individuals contributing to the project by having a reward system in place.


Pre-mining, however, has been a topic of debate within the cryptocurrency community. Critics argue that it creates an imbalance in wealth distribution or enriches early individuals disproportionately. It can also raise concerns about centralization, as the control of a significant portion of the total supply remains in the hands of a few entities.

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by sibyl , 10 months ago

@paolo.leuschke 

In the context of cryptocurrencies, a pre-mine refers to the practice of allocating a certain amount of cryptocurrency units or tokens to the creators or developers of the cryptocurrency before it is made available to the public. This is typically done during the initial stages of the cryptocurrency's launch. The pre-mined tokens are usually retained by the creators and can be used for various purposes like development costs, marketing, or distributing to early investors. Critics argue that pre-mining can be unfair as it concentrates a significant portion of the cryptocurrency's supply in the hands of a few individuals or entities, potentially leading to centralization and manipulation.