– Pre-mining is a way of rewarding the developers, early investors, and founders for their contribution to the launch of a cryptocurrency.
– The pre-mining process can be thought of as selling a company stake to its employees before it holds an IPO and goes public.
– Many view this as advantageous to the pre-miners as they end up controlling a large share of tokens.
– On the other hand, some consider pre-mining a healthy practice as it helps create a large reserve to support the project through its early stages.
– There are multiple ways in which pre-mining benefits the project, including fair rewards, warding off whales, creating reserves, and building a community.
– Disadvantages of pre-mining include the possibility of developers manipulating the price of the cryptocurrency and dumping all the coins in the open market.
– Some famous cryptocurrencies that have come under fire for pre-mining include Ripple and Ethereum.