Definition:
The term instamine comes from the combination of two words: instant and mine. It refers to the unfair distribution of coins or tokens. During instamining, a large portion of the cryptocurrency’s future supply is mined and issued to one or more addresses. This event can be due to:
- Malicious coding by the coin’s developers
- A problem with the cryptocurrency’s mining difficulty
Explanation:
One of the most famous examples of an instamine is the initial distribution of a cryptocurrency known as Dash. During the early stages of their launch, about two million coins (10%-15% of the total supply) were issued within the first 48 hours. This was due to an issue with the coding of the coin’s difficulty readjustment.
Fortunately, the majority of coins were sold on exchanges at low prices, avoiding catastrophic dumps later on. Instamining should not be confused with premining. During premining, a certain number of coins are intentionally mined by the developers for the purpose of selling and funding the project. Although, developers have also been known to premine for fraudulent purposes.
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