Instamine Definition
Instamine refers to the quick mining of the significant portion of cryptocurrency’s total supply shortly after it is launched. In other cases, it can be a premeditated plan by the founders to mine a significant fraction of the coins before introducing the new cryptocurrency to the public.
Instamine Key Points
- Instamine is a result of rapid mining of a noteworthy part of a cryptocurrency’s full supply shortly after the project’s initiation.
- This phenomenon can occur due to an intentional timeline, or it could occur due to bugs in the mining difficulty algorithm.
- Instamining is often seen as deceitful as it can lead to a centralization of supply and can undermine the impartiality of the coin’s distribution.
What is Instamine
The term instamine is frequently used in the crypto community, emphasizing a situation where a massive part of a cryptocurrency’s total supply is mined in a very short duration of time shortly after its initiation. This can occur as a consequence of a deliberate strategy by the coin’s developers, or due to programming flaws that allow swift mining in the coin’s early days.
Why Does Instamine Happen?
Instamine may happen due to the accidental or intentional fluctuations in a network’s mining difficulty shortly after its launch. Typically, the mining difficulty is low when a cryptocurrency is launched, allowing early miners to quickly mine a large proportion of the coin supply. However, in the case of an instamine, the initial mining difficulty may be set artificially low, enabling an unusually high rate of coin production in the early days.
Who is Involved in Instamine?
Primarily, the developers and the early miners of a cryptocurrency are involved during an instamine. The developers might deliberately set the difficulty low or there might be a unintentional error allowing instamine to happen. Meanwhile, the early miners take advantage of this low difficulty to mine a significant part of the coin supply.
When does Instamine Occur?
Instamine occurs right at the start of a cryptocurrency’s life cycle, within the first few days or weeks after launch. This is the period when the difficulty of mining new blocks is still low, allowing a rapid production of coins.
How is Instamine Viewed?
Many in the crypto community take a critical view towards instamines. This is primarily owed to its potential to lead to the centralization of supply, thereby contradicting one of the founding principles of cryptocurrencies – decentralization. If a few early miners hold a large portion of a coin’s total supply, it gives them a disproportionately large amount of influence over the market, leading to a higher danger of enormous price manipulations. Therefore, it is often considered a negative attribute in a cryptocurrency.
