Quote from: smooth on October 08, 2014, 03:57:52 AM

Quote from: TheFascistMind on October 08, 2014, 02:11:48 AM

But please allow me to point out an egregious flaw in your logic. Satoshi was mining when no one else was, so he got 100,000s of coins using only a few PCs to mine with. That is equivalent to a premine.

I don't consider it equivalent because when he was doing it Bitcoin was worth exactly zero, and its immediate prospects for ever being worth anything were remote. It was huge gamble to even bother paying for the equipment, setting it up (my recollection is that his setup was speculated to be more than a few PCs), keep it going, pay for electricity, etc. It is possible he "borrowed" resources from an academic lab or something, but still it took time to set it up. It literally took years before the coins could be monetized at all, even to buy pizzas. I don't even know if, without the benefit of hindsight, what he was doing was a good investment on his time and (maybe) money. If he was running a scam, it was a very, very long con, and a risky one.

Today, the situation is different. Pretty much any coin can expect to be listed on some exchanges relatively quickly (some right from the start) and have a clearly established and monetizable value, making easy for a pump-and-dumper to make a few big announcements and cash out, with no real intention to use the money to develop the coin. In fact businesses exist that do this on an industrial scale. Thus the entire model is horribly tainted by the market for lemons problem.

The other problem is that even with the above (or perhaps because of it), the amount you can cash out even with a premine is pretty small. Zoidberg said he is getting about 750 USD per month from his deferred premine, and that is after the price of BBR has been pumped. Before recent development it might have been 100 USD per month or something (not sure of the exact numbers).

He could have done a non-deferred premine instead. Assuming the liquidity to cash that out at current prices existed (which it doesn't), he could only raise about 27K USD that way. Hardly enough to fund a project. Even increasing his premine from 1% to 10% would only be 270K USD, with vastly greater liquidity issues, and still not really enough to soundly fund such a project.

So as far as I can tell premines are a magnet for pump-and-dump scams and don't work very well for funding legitimate projects anyway. A better approach is needed.

There are a few exceptions, if you have a very high profile and can generate huge hype before you even start, like Ethereum.

The faucets were also a reasonable method to get folks familiar with the coin. Exchanges have more or less supplanted the faucets.