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How does the concept of premining coins work?

For example, bitcoin gold is said to have 16,000 blocks premined. Well, at the current block reward of 12.5 bitcoins, 16000*12.5= 200,000 coins will premined for the developers which sounds sort of like a scam to me.

Anyways, how is this possible? Miners get rewarded for transactions they process. How do coins get premined on future blocks before being released?

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Those are called "pump and dump" schemes. First you own a large amount of coins, then you make your coins public and try to convince everyone to use your coin, so its value will rise and you'll be rich.

... sort of like a scam to me

Well, a rumor that says Satoshi owns 1M Bitcoins (Source)

... how is this possible?

Bitcoin Gold will change the PoW to a GPU algorithm. Thus, the difficulty will start at "one" or so. Hence generating coins will be easy until the difficulty adjustment happens.

How do coins get premined on future blocks before being released

Again, first they'll mine, then they'll make it public.

  • I guess, but the key different is 1,000,000 at the time was not worth much, they haven't been moved for years (I assume he would of sold them when BTC first hit $1k if it was a scam), and the private key seems to be lost. BTC gold is intentionally is pre-mining 200,000 coins in the hope it will be worth something. – fastquak Oct 17 '17 at 13:39
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Pre-mined blocks is really more like saying the ledger is started with X coins already assigned to a particular address(es). This is very common for an ICO where the company wants to retain coins for future sales, to distribute as promotion or salary, or as part of the bonus for the founders / pre-investors.

They're called pre-mined because typically coins would need to be mined to be introduced to the ledger, and these are introduced before any mining has even begun. In most cases, coins that are distributed as part of the ICO are not included in the pre-mined numbers.

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