The Full Story Of CannabisCoin's Premine Burn
Investors were happy when CannabisCoin developer Delta9 burned the coin's premine, but do any questions remain?
Art by: Jing Jin
CannabisCoin (CANN) has so far, been a success. A coin backed by Marijuana, perhaps the world's most useful plant, has an obvious appeal for a large segment of the population. But with popularity comes scrutiny, and it wasn't long until some of the coin's competitors began pointing out inconsistencies in CANN's blockchain.
Astute observers noticed that CannabisCoin's Rich list was dominated by a group of 27 addresses each holding 500,000 CANNs, and all coming from the coin's genesis block. Control of these coins was first denied by the developer, who later announced that the coins came from CANN's early days as a Scrypt coin.
CANN originally launched as a Scrypt coin on every stoner's favorite day, 4/20/2014. It eventually switched to X11 using a hardfork. The developer then said that the coins previously held in those 27 addresses were set aside for miners who had mined CANN's during its Scrypt days. The developer gave the miners an opportunity to exchange their old Scrypt CANN coins for new X11 CANN coins and stated that the remaining coins were unclaimed and would be burned. The developer, Delta9, created a YouTube video proving that he burned the coins.
“Burning” coins is the act of sending them to an address that no one holds the private keys for. With the coins safely locked up in that wallet, they are essentially removed from the system forever, not unlike burning physical cash.
But, astute observers, possibly from the CCN camp, noticed that roughly five million CANNs were still being held in an accessible wallet, not burned and are still traceable to the genesis block. Regardless of the motivations of the members who revealed the remaining 5 million, CANN's blockchain showed that they did in fact exist.
Eventually, Delta9 got to explaining that as well, stating that the five million CANNs will not be burned and will instead be used to fund development and bounties.
There is a little over 80 million CANNs currently in existence, making the remaining premine close to 6 %. A 6 % premine is a fairly high one, but isn't unreasonable. The problem some investors may have is the developers' apparent lack of transparency relating to this premine. The bounty wallet also represents the fourth richest wallet in the CANN network.
Originally, the developer claimed to have no control over the original premine funds, before claiming to have found the wallet's .dat files. Finding the .dat files did make a client fork unnecessary for CANN users, but forgetting that you have access to around 16 % of your own currency's total funds seem suspect to some. Further ignoring the remaining 5 million coins brings up more doubts.
Members have also asked to see CANN's old Scrypt blockchain, so they can verify that the correct amount was carried over during the hardfork. So far, the old Scrypt blockchain has not been posted publicly.
The ability to trade CannabisCoin for actual legal Cannabis gives it a powerful feature no other coin has at the moment. If and when price pegging happens, one coin will become as valuable as one gram of Marijuana, greatly increasing its price, regardless of how this premine situation played out. That may give investors plenty of reason to ignore these early issues and in the end this may be a minor footnote in the history of CannabisCoin. Still, the fact that the information is out there should not be ignored. Informed investing equals successful investments, CANN may still be a good investment, but a little trepidation might be a good thing.