Why Fastmined Proof of Work/Proof of Stake Hybrids Are Horrible Ideas

The alt coin movement has been rife with scams and get rich quick philosophies right from the start. Look at Ixcoin, the so called “first” alternative to bitcoin, which did hardly anything to improve bitcoin's protocol and truly billed itself as that other coin you could use instead of bitcoin. It dangles around the market after it has been mostly ignored and abandoned, ready to bring on gullible new investors. The lucky fact that it's merge mined with bitcoin gives it impressive security, but that's about it. And when you look into their shady past 1), you would de better off letting Ixcoin fall into the dustbin of history then trying to invest and (god forbid) talk up Ixcoin.

In another article we wrote extensively on the potential scams in the alt coin movement, which you can read about here…

A massive investigation of instamines and fastmines for the top alt coins

One can see in that post that for every 10 coins created, 7 or 8 of them make the “extreme caution” list in terms of their mining data. Everyone should be on their toes and constantly vigilant before investing any amount of money into this currencies. Only a small percentage look half decent…a couple are Proof of Stake oriented and the rest are PoW oriented. Unfortunately, there has yet to be a solidly designed Proof of Work/Proof of Stake hybrid yet. Not one. It's important to understand how a poorly designed Proof of Stake coin can seriously handicap the new investor in comparison to the people how got the coin first; either the first miners or even the first purchasers.

Darkcoin Is The King of Instamined PoW coins

Darkcoin is the king. This coin has the worst start of almost any coin. If it was any worse, even their own adopters would cringe. Just like Goldcoin (see below), they instamined a number of coins (the wiki laughably says “by accident” 2)). But **In a overly simplistic sense, Darkcoin figured out how to pull of the instamine scam and make it look good**.

If you thought the ratio of Goldcoin's production was bad, crunch the numbers on Darkcoin:

  • In 8 hours the network created 1.625 million Darkcoins.
  • From that initial day on (January 18th up to this writing, June 6th)there are 4.361 million DRK in existence. That makes 4,361,000 - 1,625,000 = 2,736,000 DRK created in less than 4.5 months
  • Once equalizing the coin creations to create a ratio, we see that the **initial mining period created coins 249 times faster than the following 4.5 month period**

Goldcoin Was One Of The Originals

Let us look a Goldcoin, a 100% Proof of Work coin.

They purpose wanted to create a coin that benefited first adopters and consequently mined 9 millions coins in 28 hours. From May 13th, 2013 to May 13 2014, there were only 21 million coins created. Clearly, they accomplished their goal of getting a ton of coins into early adopter hands and then slowed down the mining dramatically. Most people would call this not something to be proud of and “scammish” comes to mind.

The ratio of coins made in one day (7.6 million in 24 hours) to one year (30.9 mill - 7.6 million = 23.3 million) is a a rather nasty one: **119 times faster for the first 24 hour period.**

This is one of the most egregious beginner take all coins on the PoW side. Somehow Darkcoin managed to more than double the rate of early adopter benefit and avoid the ire of altcoinists (well, mostly).

As anyone can see who jumps into the currency now, nobody wants to know the coins were purposely that easy and plentiful with a **planned instant shortage** right after launch.

And yet…somebody came up with the brilliant idea to pull off this sort of gargantuan early adopter benefit…and get away with it.

It's called the instaPoW/PoS hybrid and it's taking over the alt coin industry.

The Hybrid PoW/PoS Plan In A Nutshell

Darkcoin and Goldcoin managed to get a massive number of coins flash mined. Most people caught on to the Goldcoin scam; most people have not caught on to how Darkcoin has hoodwinked them. But this coins don't even push the upper limit to how much advantage you can give early adopters with hybrid PoW/PoS.

The plan is ridiculously simple. Rush into PoS with instamine PoW, turn off PoW, and spam the social media networks about this 100% PoS coin (aka the pump). The coin will only make between 2-20% annually once in PoS, and **the coin production ratio is actually worse than the most insane PoW instamines**. See below for evidence.

Asiacoin

This coin had a number of problems with it which helped to keep it gaining serious traction about $1 million market cap. It also fits the slimy scheme of an instaPoW/PoS coin.

The first 1000 blocks produced only 100 AC in the hopes of deterring any bad start. Except the coin was programmed from the start to then generate 10,000 AC and 5,000 AC over a period of two weeks and then shut down PoW mining forever. Well, there goes the fair start!

Asiacoin offers a whooping 100% interest in the first year, probably the highest ever heard of in the crypto world. And guess what? It still gives a very large advantage to those miners in the first two weeks.

160,000,000 coins in two weeks is the PoW mining phase.

In the first year, if everyone using the coin minted via PoS, they would produce 160,000,000 in one year.

That is a 26x difference in production speed.

Then, of course, the PoS minting drops 50x to a paltry 2%.

Again, giving this coin maximum possible beenfit of the doubt, let's say 100% of the coin is PoS minted that first PoS year and the coin total is now 320,000,000. The maximum possible produced in the second year is 6,400,000 coins 3). In comparison to the first two weeks of coin creation, we have a staggering difference in pace of production…

And we get a **651x times production increase** in that first period compared to the second year.4) By comparison, Bitcoin is still in its first mining susbidy of 50 BTC a block. So there is no rate of difference in btc first two weeks versus the second year.

Boostcoin

This coin has a rate of production of 12,000,000 coins in 20 days from PoW mining. The coin will have 10% PoS minting after that.

Comparing apples to apples 5) we see that this first period of **PoW mining is 182.5 times faster in coin creation than the PoS phase**.

Cinni

Cinni created 15 million coins in 3 days. Then they completely switched to PoS minting at a rate of 3.5% annual interest.

If every coin was to be used for staking, that would mean that in one year, 15,000,000 x .035 = 525,000 coins would be generated.

If we take the amount of coins created in 3 days and compare it to the rate of creation in a whole year, it is a staggering **3476 times faster** 6)

Blackcoin

Blackcoin's blockchain reveals that from February 24 to March 1 (hardly a week), there were 74.4 million Blackcoins created 7). 50 million were mined in 3 days. Slowly the PoS was integrated into the system until at 75 million, where PoS completely took over.

When adjusting the first 6 days to a comparision how many coins could be made in one year minting at 1%, we see a **mind numbing 6034 times increase** in coin creation in that first period.

X11coin

This coin pumped out 333 coins per block up to 5.5 million coins in about two weeks. They then switched to PoS at a 3.33% annual interest.

Taking the amount produced in that first PoW period and making adjustments to compare to an annual 3.33 % PoS production, X11 coin was producing coins **737 times faster** in PoW than it is in PoS 8)

Many More To Come

These rates of coin creation are far eclipsing what premined/instamined PoW ever could have accomplished. The fact that Cinni, X11 and Blackcoin are still high up on the leaderboard of coin market cap's shows that the people haven't figured out the gig yet.

As the numbers show, it is not a good idea. Give it time.

cryptocurrency

3)
320,000,000 x .02
4)
365 days in a year / 14 days of PoW minging = 26.07. Now we take this number and multiply the coin production in those two weeks, 160,000,000, to get our equivalent annual rate of production. So 160,000,000 x 26.07 =4,171,428,571.43. Now we divide the maximum possilbe production in that second year to get our comparison rate… 4171428571.43 / 6,400,000 = 651.785714286
5)
365 days / 20 days of PoW mining = 18.25. We multiply this number times the total PoW production to get the effective annual rate of production. 18.25 x 12,000,000 = 219000000. Now we compare this adjusted number of coins to the maximum amount possible minted in PoS, which is 12,000,000 x 10% or 1,200,000 and we get 219000000 / 1,200,000 = 182.5
6)
365 / 3 days = 121.66. This is our number to multiply 15,000,000 to get our adjusted yearly PoW production. 121.66 x 15,000,000 = 1825000000. Then, using our estimated MAXIMUM PoS production in the first year which was 525,000. 1825000000 / 525000 = 3476
8)
5,500,000 coins were produced in 15 days. 365 days in a year / 15 = 24.33. take 24.33 and multiply that by 5,500,000 to get the rate of coins per year for PoW, which is 133833333.33. Then to get the estimated MAXIMUM production from PoS in the first year…which is found by taking 5,500,000 x .033 = 181,500. Divide adjusted yearly production of PoW by max estimated PoS production and you get your answer.

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