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Crypto Terms:  Letter P

What is Pre-Mining?

Meaning:
Pre-Mining - is the development of a particular quantity of cryptocurrency prior to the digital currency being made accessible to the public.
medium
2 minutes

Let's find out Pre-Mining meaning, definition in crypto, what is Pre-Mining, and all other detailed facts.

Pre-Mining is the development of a particular quantity of cryptocurrencies prior to the digital currency being made accessible to the public. Or in other words, a set of the coins that have been mined before the official release date of the particular coin.

One group of blockchain users is highly opposed to pre-mining, while another believes it is a legal technique. Supporters claim that rewarding developers and staff who participate in the project's design and modeling is reasonable and encourages their involvement.

Moreover, pre-mining should not be mistaken for Premine, a cryptocurrency with the symbol PMC.

From a cryptocurrency perspective, pre-mining could be seen as a similar practice to selling a stake in a firm of workers prior to the company going public using an initial public offering (IPO).

Typically, these early coins would be distributed to ICO investors, developers, and team members who assisted in the creation of the currency.

For example, Ethereum is the second-largest virtual currency by market capitalization and a cryptocurrency that had a substantial number of coins pre-mined ahead of its initial coin offering (ICO). Pre-mined currencies, unlike Bitcoin, are often held by a centralized body such as Ripple (XRP).

This digital currency was created for a centralized payment system that enables faster and more cost-effective means of transferring payments in collaboration with banks. However, a significant portion of this coin belongs to Ripple.

Nevertheless, pre-mining continues to be a gloomy process for a lot of individuals because it creates disbelief among users. A reasonable amount of developers would pre-mine and put away a big number of coins prior to the ICO, without showcasing this data to the public. 

Then, when the cryptocurrency is issued and values are inflated due to an absence of coins available, these creators will reintroduce their pre-mined coins into the market, causing a sharp drop in their price and harming outsiders.

cryptocurrency up for sale ahead of the <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-initial-coin-offering-ico/">initial coin offering (ICO)<\/strong><\/a>. During the pre-sale, the <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-token/">tokens are sold to interested investors and other relevant parties.<\/p>\n<p>A pre-sale strategy can be beneficial to both the developers of the cryptocurrency and the investors and it helps ensure the success of the currency ahead of its launch.<\/p>\n<p>The developers can receive the funds needed to complete the project. The investors taking part in the pre-sale <strong>obtain<\/strong> <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-altcoin/">altcoins that they can add to their <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-portfolio/">portfolio with the expectation that their value will increase over time.<\/p>\n<p>A pre-sale can also be organized as a PR campaign to boost the marketing for the ICO. This is a strategy done with the intent to increase the asset price soon after its public launch.<\/p>\n<p>There are some <strong>risks<\/strong> to holding a pre-sale. If the project fails after its launch or the developers fail to deliver the final product, investors may lose their money on worthless assets. Furthermore, the altcoin scene is highly competitive so it can be hard to ensure that the value of the new coin will stand out in the market.<\/p>\n<p>Developers also have to be mindful of the investors purchasing the asset during the pre-sale as their goal may be solely to sell it soon after the launch at favorable prices and make a significant personal profit. If investors massively <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-dump/">dump new cryptocurrency coins soon after the ICO, it can negatively impact the market reputation of the assets and its developers.<\/p>","definition":"the sale of a cryptocurrency before its official public launch.","status":"published","meta_title":"What is Pre-Sale? Definition & Meaning | Crypto Wiki","meta_description":"Pre-Sale meaning: Pre-Sale - the sale of a cryptocurrency before its official public launch.","meta_keywords":null}" :prev-section="{"id":594,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Decentralized_finance#Decentralized_exchanges","level":"easy","author_id":1,"created_at":"2023-06-19T06:59:00.000000Z","updated_at":"2023-11-21T18:31:12.000000Z","slug":"what-is-pre-ido","title":"What is Pre-IDO?","section":"P","keyword":"Pre-IDO","content":"<p>Token offerings that take place before the <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-initial-dex-offering-ido/">initial dex offering (IDO)<\/strong><\/a> are referred to as pre-IDO. It's a unique concept that allows <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-defi/">DeFi users to learn about new and upcoming <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-cryptocurrency/">cryptocurrency initiatives. Though a pre-IDO also allows DeFi projects to expand their fundraising capacity regardless of market fluctuations.<\/p>\n<p>While IDOs are one option to collect cash for a project, the price of the tokens is heavily influenced by market conditions. Developers can <strong>raise funding via a pre-IDO regardless of market instability<\/strong>.&nbsp;<\/p>\n<p>The tokens supplied in pre-IDOs are future unlocked tokens, which means that all tokens have a lockup time set before the pre-launch of IDO. When the lockup period finishes, each token is unlocked.<\/p>\n<p><strong>Pre-IDO<\/strong>, in comparison to IDO, provides more democratized investor access and higher pricing advantage. Besides, there is a lockup period, and investors gain immediate <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-liquidity/">liquidity after the stock is listed.<\/p>\n<h3>Advantages of Pre-IDOs<\/h3>\n<p>Through a pre-IDO, <strong>individual investors can invest and buy project tokens at a private investor rate<\/strong>. That&rsquo;s because they are exposed to VC-style funding events that are usually available only to VC firms and institutional investors that have millions of dollars. A regular user in a VC-style funding event enjoys a price advantage and a <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-first-mover-advantage-fma/">first-mover advantage<\/strong><\/a> over those who buy tokens during the public IDO.<\/p>\n<p>The concept of pre-IDO is also <strong>beneficial to developers<\/strong>. Hosting a pre-IDO allows projects to obtain funding and expand their capacity. Besides, pre-IDO enables developers to get sufficient financing for their projects regardless of market fluctuations. This allows them to concentrate entirely on product development.<\/p>","definition":"token offering that happens before the initial dex offering (IDO) takes place.","status":"published","meta_title":"What is Pre-IDO? Definition & Meaning | Crypto Wiki","meta_description":"Pre-IDO meaning: Pre-IDO - token offering that happens before the initial dex offering (IDO) takes place.","meta_keywords":null}" :model="{"id":610,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Cryptocurrency#Mining","level":"medium","author_id":1,"created_at":"2023-06-19T06:59:00.000000Z","updated_at":"2023-11-21T19:03:40.000000Z","slug":"what-is-pre-mining","title":"What is Pre-Mining?","section":"P","keyword":"Pre-Mining","content":"<p><strong>Pre-Mining<\/strong> is the development of a particular quantity of <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-cryptocurrency/">cryptocurrencies prior to the digital currency being made accessible to the public. Or in other words, a set of the coins that have been mined before the official release date of the particular coin.<\/p>\n<p>One group of <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-blockchain/">blockchain users is highly opposed to pre-mining, while another believes it is a legal technique. Supporters claim that rewarding developers and staff who participate in the project's design and modeling is reasonable and encourages their involvement.<\/p>\n<p>Moreover, pre-mining should not be mistaken for Premine, a cryptocurrency with the symbol <strong>PMC.<\/strong><\/p>\n<p>From a cryptocurrency perspective, pre-mining could be seen as a similar practice to selling a stake in a firm of workers prior to the company going public using an <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-initial-public-offering-ipo/">initial public offering (IPO)<\/strong><\/a>.<\/p>\n<p>Typically, these early coins would be distributed to ICO investors, developers, and team members who assisted in the creation of the currency.<\/p>\n<p>For example, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-ethereum-eth/">Ethereum is the second-largest virtual currency by market capitalization and a cryptocurrency that had a substantial number of coins pre-mined ahead of its initial coin offering (ICO). Pre-mined currencies, unlike <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin, are often held by a centralized body such as Ripple (XRP).<\/p>\n<p>This digital currency was created for a centralized payment system that enables faster and more cost-effective means of transferring payments in collaboration with banks. However, a significant portion of this coin belongs to Ripple.<\/p>\n<p>Nevertheless, pre-mining continues to be a gloomy process for a lot of individuals because it creates disbelief among users. A reasonable amount of developers would pre-mine and put away a big number of coins prior to the ICO, without showcasing this data to the public.&nbsp;<\/p>\n<p>Then, when the cryptocurrency is issued and values are <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-inflation/">inflated due to an absence of coins available, these creators will reintroduce their pre-mined coins into the market, causing a sharp drop in their price and harming outsiders.<\/p>","definition":"is the development of a particular quantity of cryptocurrency prior to the digital currency being made accessible to the public.","status":"published","meta_title":"What is Pre-Mining? 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He&rsquo;s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.<\/p>\n<p>Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain &amp; Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.<\/p>\n<p>Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.<\/p>","user":{"id":1,"first_name":"Aaron","last_name":"S.","email":"aaron@bitdegree.org","email_sanitized":"aaron@bitdegree.org","email_verified_at":"2023-12-01T09:40:20.000000Z","must_verify_email":false,"is_registered_with_wallet":false,"status":"active","country":"LT","last_connected_ip":"88.119.132.125","image_id":2641,"referral_token":"05TMu2NysXOCn525","referred_by":null,"created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2024-01-09T15:22:21.000000Z","full_name":"Aaron S."}}}" :chapter-list="[{"id":1,"title":"Blockchain","slug":"blockchain","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-blockchain.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/blockchain-101.jpg","rating":100,"sections":[{"chapter_id":1,"order":1,"slug":"what-is-blockchain","title":"What is the Blockchain?","status":"published","modified_content":null},{"chapter_id":1,"order":2,"slug":"decentralized-blockchain","title":"Anonymous & Decentralized Blockchains: The Cornerstone of Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":3,"slug":"blockchain-transaction","title":"What is a Blockchain Transaction in Crypto?","status":"published","modified_content":null},{"chapter_id":1,"order":4,"slug":"crypto-fees","title":"The Different Types of Crypto Fees Explained","status":"published","modified_content":null},{"chapter_id":1,"order":5,"slug":"what-is-bridging-in-crypto","title":"The Key Notion Behind the Concept of Bridging in Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":6,"slug":"types-of-blockchains","title":"Different Types of Blockchains: What to Look Out For?","status":"published","modified_content":null}]},{"id":2,"title":"Cryptocurrencies","slug":"cryptocurrencies","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-cryptocurrencies.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/cryptocurrencies-101.jpg","rating":100,"sections":[{"chapter_id":2,"order":1,"slug":"what-is-a-cryptocurrency","title":"What is a Cryptocurrency?","status":"published","modified_content":null},{"chapter_id":2,"order":2,"slug":"how-does-cryptocurrency-work","title":"How Does Cryptocurrency Work?","status":"published","modified_content":null},{"chapter_id":2,"order":3,"slug":"is-cryptocurrency-a-good-investment","title":"Is Cryptocurrency a Good Investment? The Pros & Cons","status":"published","modified_content":null},{"chapter_id":2,"order":4,"slug":"coin-vs-token","title":"Coin VS Token: How Do They Differ?","status":"published","modified_content":null},{"chapter_id":2,"order":5,"slug":"what-are-stablecoins","title":"What are Stablecoins, Altcoins & Wrapped Coins?","status":"published","modified_content":null},{"chapter_id":2,"order":6,"slug":"what-is-a-bitcoin","title":"Bitcoin: the Pioneer of the Crypto World","status":"published","modified_content":null},{"chapter_id":2,"order":7,"slug":"what-is-ethereum","title":"The Ultimate Blockchain for dApp Creation: Ethereum","status":"published","modified_content":null},{"chapter_id":2,"order":8,"slug":"what-is-cardano-in-crypto","title":"What is Cardano and What is It Used For?","status":"published","modified_content":null},{"chapter_id":2,"order":9,"slug":"what-is-shiba-inu-coin","title":"Shiba Inu: the Dogecoin 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Wallet?","status":"published","modified_content":null},{"chapter_id":4,"order":2,"slug":"hot-wallet-vs-cold-wallet","title":"Hot Wallet VS Cold Wallet: Which One to Pick?","status":"published","modified_content":null},{"chapter_id":4,"order":3,"slug":"non-custodial-wallet","title":"What are Non-Custodial Crypto Wallets?","status":"published","modified_content":null},{"chapter_id":4,"order":4,"slug":"what-is-metamask","title":"Metamask: The Leading Non-Custodial Wallet","status":"published","modified_content":null},{"chapter_id":4,"order":37,"slug":"how-safe-is-cryptocurrency","title":"The Key Crypto Wallet Safety Practices: How Safe Can Crypto Be?","status":"published","modified_content":null}]},{"id":5,"title":"NFTs","slug":"nfts","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-nfts.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/nfts-101.jpg","rating":100,"sections":[{"chapter_id":5,"order":2,"slug":"how-to-trade-nfts","title":"NFT Trading: The Ins and Outs","status":"published","modified_content":null},{"chapter_id":5,"order":3,"slug":"buying-nft","title":"Tips and Tricks of Choosing the Right NFTs","status":"published","modified_content":null},{"chapter_id":5,"order":4,"slug":"how-to-store-nft","title":"How to Store NFTs: Best Practices","status":"published","modified_content":null},{"chapter_id":5,"order":5,"slug":"how-to-create-an-nft","title":"How to Create Your Own NFTs?","status":"published","modified_content":null},{"chapter_id":5,"order":6,"slug":"how-to-make-passive-money-with-nft","title":"Making Passive Money with NFTs","status":"published","modified_content":null}]},{"id":6,"title":"dApps & Defi","slug":"dapps-and-defi","updated":true,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-dapps.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/dapps-defi-101.jpg","rating":80,"sections":[{"chapter_id":6,"order":1,"slug":"what-are-nfts","title":"What are Non-Fungible Tokens (NFTs)?","status":"published","modified_content":null},{"chapter_id":6,"order":1,"slug":"what-is-defi","title":"What is Decentralized Finance (DeFi)?","status":"published","modified_content":null},{"chapter_id":6,"order":2,"slug":"what-is-defi-2-0","title":"DeFi 2.0: The New Version of Decentralized Finance","status":"published","modified_content":null},{"chapter_id":6,"order":3,"slug":"what-are-dapps-in-crypto","title":"What Are dApps and How Do They Work?","status":"published","modified_content":null},{"chapter_id":6,"order":4,"slug":"defi-dapps","title":"Picking the Right dApps: Dos and Don'ts","status":"published","modified_content":null},{"chapter_id":6,"order":5,"slug":"what-is-web-3-0","title":"Web 3.0: The Future of the Internet","status":"published","modified_content":null},{"chapter_id":6,"order":6,"slug":"what-are-smart-contracts","title":"What is the Core Purpose of Smart 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