What is Instamine?
Let's find out Instamine meaning, definition in crypto, what is Instamine, and all other detailed facts.
Instamine is a short period of time right after the launch of a new coin when a large portion of its total mineable assets are mined. This may lead to a fast and uneven coin distribution between investors.
If a cryptocurrency experiences an instamine period, it means that a large amount of the asset was available early after launch, when the chances of investors being interested in the project were higher. The process typically means that the supply of cryptocurrencies is significantly greater and available at a lower price.
Instamining may be done deliberately, although in some cases it occurs accidentally and is caused by issues related to the mining algorithm.
New cryptocurrencies may offer numerous special features and benefits to stand out during their launch and attract the investors’ attention. One of such features can be setting up an easy way to mine new coins. Some cryptocurrencies opt to determine an initial instamining period to pique the investors’ interest in the digital asset.
Despite some similarities, instamining is not synonymous with pre-mining, a process when some or all of the supply is generated before the public launch of a cryptocurrency.
Some market analysts believe that instamining has ties to fraudulent activity. Others think that implementing such strategies upon coin launch creates unfair competition, particularly if a significant amount of the tokens is bought by one big group and resold at a much lower price.
When the open-source cryptocurrency Dash launched in 2014, the algorithm responsible for the mining difficulty adjustments malfunctioned. This caused roughly 2 million coins, about 15% of the total supply, to be issued to investors in just two days after the initial launch.
Although Dash did not experience massive negative consequences as the coins were sold at very low prices, in many cases, instamining can be detrimental to new cryptocurrencies.