Crypto mining is when miners use computers or servers to solve the complex multiplication of mathematical puzzles using high computational powers. It is not necessary to elaborate on crypto mining. But Pre-mining cryptocurrency is quite possible. Miners already keep in reserve the cryptocurrency in advance before it must be published in the outer world. It does not need elaboration. Trade Crypto, stablecoins, bitcoins, and other coins on the most trusted and safe trading platform.
What Is Crypto Pre-mining?
Pre-mining is an act performed by the developers. Cryptocurrency is used for completing the blockchain protocols. These blockchains are further sent to the team’s wallet. These wallets are addressed to the cryptocurrency founders. The mining and distribution of cryptocurrency before launching it in public is an act known as cryptocurrency pre-mining. The investors are rewarded with a blockchain project and this project has to be completed before coin offering or exchange of currency in the crypto world.
Pre-mining is the right of the developers because they have the authority to mine the cryptocurrency. Cryptocurrency is created in blockchains and these blockchains are thereafter forwarded to the owner of that blockchain or team founder or the people who have invested in cryptocurrency for their benefit. After a fixed time period, prices of cryptocurrency and pre-mined cryptocurrency were declared in the market for the public interest.
The Advantages of Pre-Mining Crypto
For those persons who have the responsibility to launch the new cryptocurrency in the market, Pre-mining is the best possible way for them before launching the cryptocurrency. Pre-mined distributions of tokens and making their place in the blockchain is likely to be rewarded with stocks before an IPO.
Before launching cryptocurrency in the market for public use, it is the responsibility of the developer to reserve a specific amount of cryptocurrency by spending their time and hard work making cryptocurrency. This practice encourages the team members and raises a chance to earn incentives for the said project. The encouragement and rewards given behind the project develop an enthusiasm in the employees for putting more effort into the future of their projects. Discussion about pre-mining projects among the investors and supporters creates an atmosphere of excitement, positive energy, and potential and increases the prices of the currency before its launch. In other words, Pre-Mining is a marketing technique.
Disadvantages of Pre-Mining Crypto
Nowadays, despite advantages enjoyed by the users, pre-mining has made a negative impression also. It is considered to be the easiest way for hackers to steal information about cryptocurrency. Scammers initially declare low prices of cryptocurrency, then they increase the prices. When prices touch their height, scammers take advantage by selling their holdings for big profits. It is also wrong when a group of people are granted permission to access their coins which seems to be unfair done by the cryptocurrency community and also the crypto selling process is not visible to all.
Study in case of Ripple (XRP):
Ripple is an example of a pre-mining cryptocurrency. When XRP was launched in December 2012, at that time, 100 XRP was already pre- miners whose cost was about 100 billion dollars. Later on, news came in sight that the founding team of XRP has already reserved the supply of XRP approximately 50 to 70 percent. After that scam, the owner of the company resigned from their job and later on sold a huge amount of XRP and gained its profit.
The owner of the company, McCaleb has sold one billion XRP between 2014 to 2019 amounting to rs. 135 million dollars. In 2020, again he sold 1.2 billion XRP and so on. This particular case of McCaleb has dropped confidence in cryptocurrency and therefore its prices started dropping.
Trusting Pre-Mined Cryptocurrency?
Although many cryptocurrencies are planned to be pre-mined, prices were not declared by the blockchain community. Despite this, pre-mining should be eliminated. Any new concept of cryptocurrency should be introduced for its promotion criteria. However, pre-mining raised some doubts about its actual prices, its value and trust among the users, founders and developers. Moreover, a committee should be constituted to talking all important rules and regulations of pre-mined cryptocurrency. Verification stages should be reviewed by the committee and cross-checks must be implemented so that no one can take extra advantage of cryptocurrency and nobody could overwrite the rules behind it.
OTS News on Social Media