TUESDAY 27TH MAY 2014
It’s difficult just to find 10 altcoins that aren’t blatant premine /instamine/ fastmine pump and dump scams, never mind 10 coins that genuinely improve on bitcoin.
That’s pretty amazing to say, considering these coins have a chance to experiment with the most groundbreaking technology in the fastest growing industry in the world.
Looking at the price charts on coinmarket.com we can see a familiar pattern for most altcoins – A quick pump at launch by a few preminers / instaminers whose massive stake in the currency allows them to easily manipulate the price up, create an impressive market cap and percentage return which sucks in greedy investors through marketing hype, then dump it on them to send the coin crashing by 90% or more. PoW / PoS hybrids are particular notorious for this problem.
Launch: Scam distributions leading to short life of the coin because instaminers look to cash out early after an initial pump
Distribution of a new currency is a huge and underrated problem for competing coins. Bitcoin remarkably solved this by taking a patient and meticulous approach to issuing coins in a steady, consistent supply over a long period of time. Satoshi didn’t give himself higher block rewards than the other early miners.
Bitcoin took 10 months to obtain any value at all. Most founders of altcoins reward themselves with a massive percentage of the money supply within the first few days and have a coin worth millions within 10 days.
The problem of a “fair” distribution where the coin isn’t susceptible to early investors purposefully cashing out is a huge problem.
Current large coins that are particularly bad offenders of this are:
Peercoin 3rd biggest in the world
Blackcoin, 10th biggest in the world
Megacoin 21st biggest in the world
Saturday 2nd July 2016
In May 2014 I wrote a report looking to find a few coins that were potentially useful and not scams. I couldn’t find many because of the premined, instamined problem.
Most coins follow a predictable pattern. A quick pump launched by a few preminers, big hype, big market cap, scam people to get on board. Dumped. Crash by 90% or more. Often a dead cat bounce, doubling or tripling from those 90/95% losses, then a steady fall towards zero.
Here’s how the coins I analyzed on May 27th 2014 have performed since:
Category 1: Disqualified From My “Ethical / Useful List”
May 27th 2014: Market Cap = $2.2mill
July 1st 2016: Market Cap = $0.7mill