<p>Arguments of Nxt creator are written here - <a href="https://nxtforum.org/initial-distribution/initial-distribution-of-100-pos-currencies/" rel="nofollow">https://nxtforum.org/initial-distribution/initial-distribution-of-100-pos-currencies/</a>:</p>

<blockquote>
  <p>Initial distribution of the coins and the forging schedule are more
  serious problems than they appear at first glance. A 100%
  proof-of-stake currency needs at least a small part of the coins to be
  distributed in the beginning because these coins is the only forging
  instrument. A forging schedule has a lot of influence on initial
  distribution and must be defined in the first place.</p>
  
  <p>The PoS algorithm used in Nxt has such properties that give a little
  advantage to an account that holds more coins comparing to an account
  with a lower amount. If every block subsidizes the forger with extra
  coins (in addition to the fees) then bigger accounts become even
  bigger by following the compound interest curve. In a currency with
  selfish forgers most of the coins would be absorbed by very few
  accounts that would lead to centralization of the currency. Because of
  this all the coin in Nxt were distributed at once in the genesis
  block.</p>
  
  <p>Bootstrapping requires to make a decision how to do the initial
  distribution. We consider three main schemes, any other scheme can be
  represented as a combination of them.</p>
  
  <p>The first scheme – all the coins go to a single account controlled by
  one entity that transfers coins to the others in exchange for work
  done for development and promotion of the currency. This scheme is
  completely unacceptable because it’s not “compatible” to decentralized
  nature of cryptocurrencies.</p>
  
  <p>The second scheme – all the coins are split equally among a group of
  people. This approach faces some problems. A Sybil attack can be
  easily conducted by an entity to acquire a significant part of the
  coins. Such a counterattack as usage of a certification service can’t
  be used because majority of potential users won’t agree to reveal
  their true identities. Another possible counterattack, based on
  proof-of-resources approach, can’t give “fair” distribution because
  the resources are distributed in “unfair” way. Anyway, even if the
  Sybil attack could be significantly mitigated, the second scheme is a
  bad choice because the history of humankind teaches us that an economy
  driven society where all individuals own equal amount of resources is
  unsustainable and even utopian. (Note by CfB: It would be interesting
  to hear opinion of NEM guys on this issue…)</p>
  
  <p>The third scheme – all the coins are distributed in “chaotic” way.
  This scheme doesn’t have disadvantages of the previous ones, no
  centralization, no necessity to deanonymize users, no need to
  counteract Sybil attacks. Economy and sociology sciences state that
  distribution of the coins will follow the Pareto 80-20 principle. An
  important note should be made. The fact that (almost?) all the
  societies conform to this principle assures that the third scheme is
  the best one. The Pareto principle seems to be a result of universal
  but yet unknown laws of nature. If the distribution follows the
  principle then with high probability we can assume that our system
  will sustain for a long period of time. The previous schemes will
  transform into “80% of coins belongs to 20% of entities” systems
  anyway, but the third scheme has such an advantage that it doesn’t
  need to survive the period of instability.</p>
  
  <p>According to the described above logic Nxt was created by issuing all
  the coins at once and distributing them by following the last
  distribution scheme.</p>
  
  <p>Initial distribution has two properties – percentages and number of
  participants. Common sense says that number of participants should be
  as large as possible.  This seems to be true, but we should take into
  account that every system has three main stages of the progress –
  bootstrapping, normal functioning and decaying. We consider only the
  first two because our goal is to create an ever-functioning system.</p>
  
  <p>We shouldn’t ignore the lessons of history. Societies created by a lot
  of people are abnormal phenomena. Number of participants in the very
  beginning should be rather small than large. This is an arguable
  statement but disputes on the issue lay out of the scope of this
  paper. The creator of Nxt preferred a small number of “founders”
  because he had no possibility to do several experiments on finding the
  best number nor he had time to build a theory that could predict this
  number. The most stable economic systems were always bootstrapped by a
  few people (feods, corporations, etc.) so it was safer to follow a
  similar way.</p>
  
  <p>Now, half a year after the launch of Nxt we see that it didn’t die and
  keeps growing at fast pace. This lets us guess that the choice of
  BCNext was a correct one.</p>
</blockquote>

CC BY-SA 3.0
2014-07-20T02:11:22.703Z
I miss a tl;dr.
erik
CC BY-SA 3.0
2014-07-20T10:36:36.193Z
TL;DR: Cryptocurrencies with "fair" distribution are not viable.
Come-from-Beyond
CC BY-SA 3.0
2014-07-08T18:31:54.393Z
2014-07-08T19:03:27.390Z
2014-07-08T19:03:27.390Z
Come-from-Beyond
<p>Whenever someone brings up NXT (nxtcoin) as a topic, many people's first reaction is the initial distribution of how nxt was setup. Many consider this a "premine" event and see it as a potential failure in the coin itself as the initial 75 stakeholders controlled the majority of it. </p>

<p>What are some arguments that one can give to help clarify this way of distribution? </p>

CC BY-SA 3.0
2014-07-31T14:55:35.333Z
My telepathic implant is broken, it would be not bad if one of you (dchapes, Recall, cdecker, Pieter Wuille, Jan Moritz Lindemann) provided more info. Pareto's principle can't be considered "opinion-based" because it's manifestation of fundamental laws of the nature.
Come-from-Beyond
<wealth-distribution><proof-of-stake><nxt>
What are some counter arguments for NXT (nxtcoin) "premine" or initial distribution setup?
Patoshi パトシ
# What are some counter arguments for NXT (nxtcoin) "premine" or initial distribution setup?

(Asked by: username_0 on 2014-07-08)

Whenever someone brings up NXT (nxtcoin) as a topic, many people's first reaction is the initial distribution of how nxt was setup. Many consider this a "premine" event and see it as a potential failure in the coin itself as the initial 75 stakeholders controlled the majority of it.

What are some arguments that one can give to help clarify this way of distribution?

**Tags:** wealth-distribution, proof-of-stake, nxt

> **Comments:**
> **username_1**: My telepathic implant is broken, it would be not bad if one of you (dchapes, Recall, cdecker, Pieter Wuille, Jan Moritz Lindemann) provided more info. Pareto's principle can't be considered "opinion-based" because it's manifestation of fundamental laws of the nature.  

---

## 1 answers

### Answer by username_1 on 2014-07-08. Score: 4 | Accepted answer

Arguments of Nxt creator are written here - <https://nxtforum.org/initial-distribution/initial-distribution-of-100-pos-currencies/>:

> Initial distribution of the coins and the forging schedule are more
> serious problems than they appear at first glance. A 100%
> proof-of-stake currency needs at least a small part of the coins to be
> distributed in the beginning because these coins is the only forging
> instrument. A forging schedule has a lot of influence on initial
> distribution and must be defined in the first place.
>
> The PoS algorithm used in Nxt has such properties that give a little
> advantage to an account that holds more coins comparing to an account
> with a lower amount. If every block subsidizes the forger with extra
> coins (in addition to the fees) then bigger accounts become even
> bigger by following the compound interest curve. In a currency with
> selfish forgers most of the coins would be absorbed by very few
> accounts that would lead to centralization of the currency. Because of
> this all the coin in Nxt were distributed at once in the genesis
> block.
>
> Bootstrapping requires to make a decision how to do the initial
> distribution. We consider three main schemes, any other scheme can be
> represented as a combination of them.
>
> The first scheme – all the coins go to a single account controlled by
> one entity that transfers coins to the others in exchange for work
> done for development and promotion of the currency. This scheme is
> completely unacceptable because it’s not “compatible” to decentralized
> nature of cryptocurrencies.
>
> The second scheme – all the coins are split equally among a group of
> people. This approach faces some problems. A Sybil attack can be
> easily conducted by an entity to acquire a significant part of the
> coins. Such a counterattack as usage of a certification service can’t
> be used because majority of potential users won’t agree to reveal
> their true identities. Another possible counterattack, based on
> proof-of-resources approach, can’t give “fair” distribution because
> the resources are distributed in “unfair” way. Anyway, even if the
> Sybil attack could be significantly mitigated, the second scheme is a
> bad choice because the history of humankind teaches us that an economy
> driven society where all individuals own equal amount of resources is
> unsustainable and even utopian. (Note by CfB: It would be interesting
> to hear opinion of NEM guys on this issue…)
>
> The third scheme – all the coins are distributed in “chaotic” way.
> This scheme doesn’t have disadvantages of the previous ones, no
> centralization, no necessity to deanonymize users, no need to
> counteract Sybil attacks. Economy and sociology sciences state that
> distribution of the coins will follow the Pareto 80-20 principle. An
> important note should be made. The fact that (almost?) all the
> societies conform to this principle assures that the third scheme is
> the best one. The Pareto principle seems to be a result of universal
> but yet unknown laws of nature. If the distribution follows the
> principle then with high probability we can assume that our system
> will sustain for a long period of time. The previous schemes will
> transform into “80% of coins belongs to 20% of entities” systems
> anyway, but the third scheme has such an advantage that it doesn’t
> need to survive the period of instability.
>
> According to the described above logic Nxt was created by issuing all
> the coins at once and distributing them by following the last
> distribution scheme.
>
> Initial distribution has two properties – percentages and number of
> participants. Common sense says that number of participants should be
> as large as possible. This seems to be true, but we should take into
> account that every system has three main stages of the progress –
> bootstrapping, normal functioning and decaying. We consider only the
> first two because our goal is to create an ever-functioning system.
>
> We shouldn’t ignore the lessons of history. Societies created by a lot
> of people are abnormal phenomena. Number of participants in the very
> beginning should be rather small than large. This is an arguable
> statement but disputes on the issue lay out of the scope of this
> paper. The creator of Nxt preferred a small number of “founders”
> because he had no possibility to do several experiments on finding the
> best number nor he had time to build a theory that could predict this
> number. The most stable economic systems were always bootstrapped by a
> few people (feods, corporations, etc.) so it was safer to follow a
> similar way.
>
> Now, half a year after the launch of Nxt we see that it didn’t die and
> keeps growing at fast pace. This lets us guess that the choice of
> BCNext was a correct one.

> **Comments:**
> **username_2**: I miss a tl;dr.  
> **username_1**: TL;DR: Cryptocurrencies with "fair" distribution are not viable.  

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