Premining
Beginner
What Is Premining?
Premining refers to the process in which a portion of cryptocurrency tokens is mined or created before the official launch of the project. These premined tokens are typically allocated to the project's developers, early investors, or other stakeholders involved in the cryptocurrency's creation and development.
How Does Premining Work?
In a typical Proof of Work (PoW) blockchain network like the one of Bitcoin, new units of cryptocurrency are generated through a process called mining, which involves solving mathematical problems to validate transactions and secure the network. In contrast, premining bypasses this process by creating a certain number of tokens before the project or token is publicly launched.
Typically, these premined tokens are distributed according to a predetermined plan: