What Is Premined Currency?
What Is Premined Currency?
One of the most confusing aspects of digital cryptocurrency is the concept of mining. Like the gold and other precious metals that have formed the basis of traditional economies in the past, cryptocurrency like Bitcoin must be ‘mined’ to be released into the world. However, with cryptocurrencies, mining involves using sophisticated computer systems to solve a series of challenging equations that collect and verify transaction records. Mining helps the system remain stable and secure, while keeping it decentralized. In exchange for completing a block of transactions, miners — who verify their efforts using what is known as a proof-of-work system — are rewarded in Bitcoin.
Mining harnesses the collective computing power of a peer-to-peer network to keep the currency secure and tamper-proof. It also helps control the release of new Bitcoin into the real-world economy. Just as printing too much new money at one time leads to inflation, releasing too much Bitcoin will devalue it and upset the cryptocurrency market. The Bitcoin system is designed to adjust according to the total mining power of its peer-to-peer network so new blocks are released and solved at a predetermined rate.
How Does Premined Currency Work?
As the name implies, a premined cryptocurrency is one that has already been mined and is ready to release into the world. Typically, with a premined currency, a fixed supply is established at the beginning and distributed according to a strict schedule, until reaching its maximum cap.
In the past, critics have associated premining with unethical distribution practices, where a small group of stakeholders hoards a large percentage of the available currency. However, well-managed communities can use premining to their advantage.
Benefits of Premined Currency
If done properly, premining can have benefits for both investors and currency users. Premining requires fewer resources, which keeps overhead and distribution costs low. Often, these savings are passed on to users in the form of lower fees. As well, premining is better for the environment. The sudden growth of cryptocurrencies has raised significant questions about the amount of energy consumed by the mining process, particularly as competition for blocks becomes fiercer and miners are investing in increasingly powerful computer systems to gain a competitive edge.
Premining also addresses potential distribution issues and allows for alt coins to grow at a more stable and managed pace. Because of this, it’s easier to administer dividends to users, creating greater buy-in and ultimately more vibrant communities with long-term growth potential.
Aureus is a unique alt coin with a premined supply of 21,000,000 coins. Our product is backed by a reserve of 15,000 Bitcoin in a professionally managed trust overseen by a third-party digital asset custodian. Investors receive dividends based on the amount they pledge back to the system, as well as returns based on the performance of the Aureus Bitcoin Trust.
We designed our product to be a smarter, more stable and more ethical premined alt coin. Read more about how it works by downloading our white paper today, or contact our office directly for the latest updates.