Topic: How to Identify a Troublesome Altcoin (Read 1200 times)

In a free market, why would you choose to back a premined coin, when there are not premined coins available?
I am sure the devs can mine enough to get rich if there coin is sucessful, premining is just a pump and dump idea.

Really, at the end of the day what's the difference between a premined coin and any other coin that was initially mined by a small set of individuals?  This whole premine=scam rhetoric is nothing more than FUD to drive competing alts down.

On the premining bit - here is my $0.02

Premined is such a taboo word here.  Premine = Scamcoin is pretty much everyone's opinion.

I have no issue with premining as long as the devs are up front about it.  Many of them are, and premine a small percentage of coins to use for bounties, giveaways and other promotions.  I'm totally fine with this, again, as long as they disclose this in the official coin announcement.  Because you know for damn sure the first person to download the wallet/source is gonna check and yell SCAM! if coins were premined and not disclosed.

Most folks are REALLY, REALLY against the devs taking any premine for themselves.  I'm a little conflicted about this.  For a coin to be successful it needs some dedicated devs and without at least a pocketfull of their own coins to cash in on, exactly what incentive do they have to continue developing/promoting the coin?  If they came up with the idea, developed the coin, and it becomes wildly successful why shouldn't they make some cash?  Indeed, 10% or 20% is pretty excessive but what's wrong with taking a 1% premine for yourself?

How about no new threads in the Announcements section until you have at least 50 post count?  I've noticed the vast majority of new coins are coming from people with less than 5 (basically, just out of Newbie jail).

If we could somehow limit this to one per week that would at least get the volume down to something more reasonable.  (Once a month would be even better.)

Maybe we shutdown the Announcements section entirely for forum members and only mods can post there.  Devs submit coin ideas, we do a weekly poll and let the community vote on which ones get "released."

it would be good to add all the new coins

take it easy! you are here to make money!

Very useful analysis. Thanks

good point, ipsum. So if there is a coin with a lot of hype and no developers or hardly anyone actually manning the ship, that is certainly cause for concern. A well balanced community is needed for continued growth. That will probaby get added to the list assuming more people comment on needing that.

However, i still would say the question of premine and instamine is very important. You can have a great community and team, but five bad apples who have most of the early coins can ruin the party for everyone.

I believe that whether or not this preminada only matters to the ego of the miners.
It really is imporant is the community that is behind the coin, if large and strong .. that currency will rise
If it gets larger communities preminado is needed, so be it.

There miners get rich, why not the developer?

again, how important is the community that's behind the coin

And in a community, not only are the miners... there developers, marketing, investment, web development, translators etc etc, very helpful people who know nothing of mining and they are necessary.

I have a lot of friends interested in coming into alt coins and they are also in need of this valuable information. I first found out about pre mined coins on btc-e trollbox and I wasn't quite sure what they meant by it but now I have a better understanding I will investigate more deeply each coin as it comes out. I am not a miner but even so this knowledge can make a huge difference to alt coin collectors.

Cross post from newbie forum...it properly fits in this forum anyway.

~

Altcoins are springing up like wild fire. The sooner we address which are good and which are spurious the better.

There are a lot of people divided on this issue. Should we support only bitcoin? should we support alt coins? In my opinion, either way we should have a system of evaluating each coin as they appear. If you are only for bitcoin, the evaluation system (hopefully) exposes the flaws and potential scamminess of the coin. If a supporter of multiple cryptocurrencies, the system will help newbies quickly identify the really good alt coins, the iffy, speculative alt coins, and the straight up I'm-coming-for-your-wallet coins. It doesn't matter which side of the fence you fall on, a system to evaluate a new coin is necessary to both sides.

I don't pretend to have the answers, but maybe if many people post here we can set up a stickied topic with tons of useful information?

Here is my 2 millibits on the topic.

PREMINING AND INSTAMINING

This is a phrase that is used frequently when people talk about a new cryptocurrency. I see it in two slightly different contexts. On one hand, a "premine" can mean that the coin was created and official mining had begun but only insiders were allowed to begin mining at the easiest levels. This means the coin was not announced properly to the public and only friends of the developers gobbled up much of the first coins. The other context is in the nature of the amount of coins allowed to be mined in the very outset of the coin. Let's jump right into an example using a very useful (if incomplete) website called www.cryptometer.org

Take CloudCoin. Go to the above website and click on the CloudCoin link for the first 96 hours the coin ever existed. scroll down to the graphs labeled "minted currency" and total supply. Notice that within the first three hours, almost 1,000,000 coins were minted. Now notice in the next three days, the average minting of coins drops at least ten times the amount to 100,000 or even less. If you go back on your browser and click the "rest of days" CloudCoin link, you can see that it was averaging closer to 10,000 newly minted coins a day. That means coins were made in 100 times higher frequency in the first few hours then in the rest of its life.

Looking at the total supply (albeit this graph is not up to date), those one million coins minted by day 1 account for more than 33% of total coins. This is a major red flag. What is tells you is that whomever mined the first few hours of this coin got a significant percentage of total coins minted. A small number of people potentially own the currency. Now, does this make the coin a scam? Not necessarily. But it DOES SUGGEST tha a few people could sell their stake and conceivably crash the currency's value. It is also worth noting that SOMEONE CAN CREATE A COIN WITH THIS INTENTION. They can mine up as much as they can in the beginning, make a bunch of PR on the net about how cool their new coin is, and as millions come in, they (not so) quietly sell ten percent of their coins every milestone their coin reaches. That should be a concern if you are considering investing.

Look at Bitcoin's cryptometer charts for comparison. Thankfully, millions of bit coins were not mined at the first few days. Primecoin is another sexy graph for anti-premining folks. In fact, take a look at a dozen of them and you'll be surprised at the number of coins that had a mining similar to Cloudcoin. Millions mined the few day or so, and then the amount of mined daily drops significantly, making the first miners (probably developer buddies) hella rich.


So there you have it. Cryptometer doesn't cover all the coins out there, but maybe someone can post another link of someone who does? Check out your coin, do some digging.

People can post another genre of study for an altcoin and if it gets enough QFT (Quoted for truths) I will copy and paste it into my first post. Then we can have a nice study guide to begin your alt coin quest!