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When starting an altcoin from scratch, how would distributing premined coins to a certain community affect the currency?

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2 Answers 2

pro's:

  • dev gets paid
  • some bounties and coin distribution can occur

con's:

  • depending on the size of the premine, developer could get an unreasonably large amount of coins for what is essentially a copy and paste job.
  • negative preconceived opinions about the coin because it is premined.
  • dev could be a scammer and dump all the coins, rapidly deflating the price(ie, a pump and dump)
  • those who claim the bounties may run with the money and pull the services at a moments notice once the bounty is paid.
  • coin may be subject to 51% attacks, difficulty stranding attacks, and other undocumented forking attacks from anti-premine "activists", who may be the vocal minority but often have the majority of hash on any given coin.
  • the coin will be under constant attack from trolls
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wow,"anti-premine activists" that's new :). I believe the last one from the cons list could happen to any new altcoin whether it's premined or not. –  Coup de Grace Mar 31 at 19:42

I'd say a fair distribution of premined coins has these benefits:

  • Gives the coin visibility over the 80+ altcoins out there, some with competing target markets (e.g. PesetaCoin vs SpainCoin - latter is premined and will be distributed)
  • Creates interest in it (mostly from the group that can potentially receive them)
  • A lot of people end up with at least some of those coins, increasing the possibilities some will use such coins to pay for stuff (kick-starting an economy using this coin) rather than simply cashing them right away
  • Even for those who do cash the coins right away, it's literally money fallen from the sky, created ex-nihilo. Just like fiat, but directly benefiting them.
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