First, lets be clear. Only the first year will users be making 100% interest. After that, it linearly reduces down to 6% after 10 years.
And I can tell you why: Because of the rich founders, the rich angel investors and the rich foundations.
Here is the real reason:
From page 20 of the Neucoin whitepaper:
One severe weakness of Peercoin is that it suffers from extremely low mining participation,
with typically less than 10% of the currency supply staked at any one time. This means that
an attack requiring control of 51% of the staked coins only requires control of 5.1% of the
total currency supply. There are several factors that contribute to the low mining rates in
Peercoin, but the principal one is miniscule rewards for mining: just a 1% annual return. The
small amount of mining that does take place in Peercoin is most likely driven more by selfless
efforts to support the currency than by the financial rewards of mining.
In contrast, NeuCoin provides very high compensation to miners, especially during the
early years following its launch. Specifically, NeuCoin’s coinstake rewards begin at a 100%
annual rate and decline in a linear fashion over ten years after which they reach a 6% annual
rate, where they remain indefinitely. These high reward rates will incentivize a large number of
miners to stake a large number of coins. In addition, these high reward rates create incentives
for cloud mining operators to provide services to NeuCoin holders not interested in mining
themselves, where both the mining operator and the NeuCoin holder can receive substantial
rewards.
Oh I forgot, everything that the Neucoin says is all lies, right? So you might as well just say "Neucoin is the devil incarnate" and leave it at that.
Second, simple algebra shows that regardless of the reward percentage, as long as users are mining, the Rich maintain the same, "purchasing power" as you called it, vs the poor. Let A be user A, B be user B, and p equal to the percentage earned. Then A*(1+p)/ (B*(1+p)) = A/B.
Wrong! This formula ignores compounded interest! As shown in
https://bitcointalksearch.org/topic/m.11775144 and as described in the whitepaper: Larger shareholders ""receive payments more frequently".
Let m be the number of Blocks solved by rich user A within a certain time frame and n the number of blocks solved by poor user B within the same timeftame. Then
A*(1+((p/m)/100%)^m)
the rich user’s share increaseswhile
The rich get richer while the poor get poorer.B*(1+((p/n)/100%)^n)
the poor user’s share decreasesThe only way a poor user (or even a rich user who doesn't mint 24/7) can counteract this inequality is to send his coins to a pool. This will make him dependent on a third party which is the direct opposite of „decentralized“.
Did I ever say a "poor user" shouldn't use a pool? This is how the conversation started! I told you that decentralization comes in when users have around $1000 or so, and at that point the security risk of having someone else hold your coins outweighs the benefits of the additional compound interest. So, the decentralization works when users that have around $1K or so weigh the risks and make the decision to solo-mine.
So, if a "poor user" uses a pool then m=n, and therefore it *still* reduces to A/B.
It looks like this is the case (you need to DEPOSIT nokoins to use the pool),
but isn't that dumb? What other coin requires you to
put your funds into a pool to use that pool?
Yes that's dumb.
As I said above, this is what keeps Neucoin decentralized. Replying with "it's dumb" is not a counterargument.
