Mining is a priority event which is engaged with blockchain-based cryptocurrency applications. However, mining is linked with the coin production of the cryptocurrency network. More simply, the coins should be produced within the network to perform mining. What would it be if a large number of coins were produced within the network at once? This kind of situation is known as an Instamine. Instamine is the subject of this context and let’s discuss the possible impacts of Instamining.
What is an Instamine, and how does it work?
When a large number of cryptocurrency coins are produced at a single attempt, it is said to be an occurrence of an Instamine. But this situation is different from the scheduled release of cryptocurrency under consensus protocols such as Proof-of-Work. Instamine creates a friendly environment to produce bulk coins during a specific time period. But this might lead to some unfair distribution among a few parties who are very close to the network’s affairs, such as its developers and founders. In general, Instamine is processed when the investors are highly impressed in investing. Therefore, a huge amount of coins can be sold due to the above interest.
Instamine might occur either purposely or unintentionally. As soon as a cryptocurrency was released, there would be a certain shortage of supply due to ineffective algorithms for adjusting the difficulty levels of new coin generation. As a result, an instance of Instamining may exist in the supply chain. On the other hand, developers might create an Instamine purposely in order to build a huge selling percentage of coins in a simulated environment. However, Instamine can also be presented due to faithless acts of the developers as similar to the unfair occurrence of Premining.
Issues of Instamining
As previously stated, an Instamine could occur as a result of the developers’ and founders’ fraudulent and unethical behavior. If an investor buys these unfairly produced tokens or coins, they are able to sell them and gain a huge unfair profit. Compared to the effort which should be given to mining, such as spending a large amount of energy, time, and resources, the above effortless profit is unreasonable. This is the primary criticism, as well as the problem with Instamining. On the other hand, the fortune parties of an Instamine might hold the coins until the prices rise. Even worse, this could jeopardize the cryptocurrency’s future.