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Understanding mined and pre-mined tokens

What is a crypto token?

Cryptocurrency tokens, also called crypto assets are a special representation of virtual currency that reside on their own Blockchain. They represent either an asset or a utility. Crypto tokens are often used to fundraise for crowd sales. Most are based on the Ethereum Blockchain.

Crypto mining

Crypto mining is the process through which cryptocurrencies or tokens are created. It entails the solving of complex computations using a computer. Each new coin is verified by all the miners in the network before it is updated on the Blockchain. mining can generate a small income for the crypto miners.

Mined cryptocurrencies

After a miner has achieved the hash and validated the Block inside the Blockchain of the desired cryptocurrency, we are left with a mined cryptocurrency (new crypto asset). Mining can either take a Proof-of-Stake (PoS) or a Proof-of-Work (PoW) approach. For years, most Blockchain projects have been developing alternative consensus protocols.

Pros of mined tokens

-Hold a higher value than the coin they represent

-Used to represent shares within a company

-Used for fundraising by companies through selling crypto assets and equity

-Determines the prices of assets

-Designed for fast trading

-Form of investment

Pre-mining

Pre-mining is the creation of crypto coins before the main cryptocurrency is launched in the market. In simple terms, they are coins that are mined before public Launch.

Pre-mining has had a negative connotation because people feel like private developers use them to fill their pockets. They keep some coins to themselves before releasing the source code of cryptocurrency to the public. Experts also believe that pre-mined tokens greatly influence crypto live prices.

Despite the stereotype surrounding the pre-mined tokens, still, they have numerous advantages to them. Which is why most companies are choosing pre-mine tokens or choose to pre-mine their cryptocurrencies. Also, pre-mined tokens help developers and investors who are involved in the early stages of development and would like to know about cryptocurrency prices.

Requirements to get started as a miner

-Membership with a good crypto exchange

-A crypto-mining software package

-Computer hardware with special GPU clip

-Cooling means for hardware

-A strong internet connection

-A Specific Integrated circuit (ASIC)

 

 

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