The price of Grin (GRIN) soared to as high as $261.65 per coin on January 16, after its first block was mined on the first day of MainNet launch. After that, however, its value took a nose dive, plunging by more than 90% to less than $5.

 

A Potential Bitcoin 2.0

Eric Meltzer, Partner of INBlockchain, told CoinDesk in a recent interview, “There is (by our conservative estimates) 100 million dollars of mostly VC money invested into special-purpose investment vehicles to mine Grin.”

Grin serves as the second cryptocurrency — the first is known as Beam — leveraging the MimbleWimble privacy technology that has successfully gone live on MainNet.

 

According to the official website of Grin, the token is “launched fairly, free of ICO, pre-mine or founder’s reward.” This initiative relies only on donations.

Just like Bitcoin, Grin makes use of the Proof of Work (PoW) consensus mechanism, but with a different mining algorithm which is ASIC resistant, with the purpose of avoiding Bitcoin-style hashrate arms races.

As a partner at a crypto investment firm put it, “This is the thing that comes closest to Bitcoin. In a lot of investors’ minds it kind of pattern-matches to Bitcoin 2.0.”

 

Why Grin Is Becoming Popular

It has been said that someone has contributed at least partly to the popularity of Grin.

As Cryptonews Hub previously reported, the upcoming Ethereum Constantinople hard fork is set to trigger a reduction in block rewards from 3 ETH to 2 ETH. Some industry insiders even argued that this move may wipe out a number of miners. In this case, mining may become less profitable for miners after the upgrade.

Grin, equipped with the GPU friendly and ASIC friendly algorithms, is favorable for miners to some degree in the face of a rolling bear market.

Another reason why the coin has recently caught on in crypto land may lie in the brutal crypto winter, as most crypto participants are now seeking after any possible opportunity to make money.

To Follow Suit or Not

Grin has been criticized for its monetary policy.

Without a pre-mine, each block awards the user with 60 Grin tokens each minute. In contrast with the Bitcoin blockchain where there is a fixed amount, Grin boasts an infinite amount of coins. As shown in the graph below, the supply inflation of the coin starts high yet subsequently drops to around 10% after a decade, and to near-zero in the end.

(Source: TokenGazer)

According to CoinDesk, Dovey Wan, Founding Partner of Primitive Ventures, argued that the early mining may not be a profitable move. “Grin won’t be profitable, especially early on,” she said.

A famous crypto forum Bitcointalk has recently accepted Grin for forum payments, according to Cobra, owner of the web portal Bitcoin.org and Bitcointalk.org. “This is the first “altcoin” the forum acknowledges in this way (even BTC LN payments aren’t accepted yet).”