The WP says,
"in abandoning time-weight, NeuCoin chose the benefit of higher security at a cost
of creating small advantages for large miners over smaller miners,"
How does this compounding effect play out, over say 5yrs
"in abandoning time-weight, NeuCoin chose the benefit of higher security at a cost
of creating small advantages for large miners over smaller miners,"
How does this compounding effect play out, over say 5yrs
Compound interest is the rich NoKoiner's best friend, and the poor NoKoiner's worst enemy. But you don't have to take my word for it:
"Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it." [Albert Einstein]
As the whale gets proportionally richer than the minnow, does that in itself make it even harder for said minnow to stake?
Yes.
The $100 guy can always join a mining pool, which would even out his percentage a lot
... which will result in some of the same issues that Bitcoin PoW mining has:
Quote from: NoKoin Strategic Plan
A second, widely recognized drawback of PoW mining is its tendency to become centralized. In Bitcoin’s early years, when Bitcoins had little value, mining was highly decentralized among tens of thousands of individuals using consumer-grade computers - and this true peer-to-peer nature was considered one of Bitcoin’s core benefits. Today, this is changing.
First came mining pools, in which large numbers of miners combine resources and share mining awards in order to receive frequent, predictable payments rather than waiting and hoping for a single large award. The largest pools have already breached the point of having a majority of the network’s computing power, where they would have the capability of seriously harming the network. Second, hobbyist and small-scale miners have been getting knocked out of business, pool or no pool.
...
Centralization of PoW mining is problematic for several reasons. First, centralization of mining power represents a severe security risk. Any entity (or entities working together) that controls 51% or more of the network’s computing power can seriously harm the network. Second, when there are only a few, highly-capitalized entities that control the network, the entire network becomes susceptible to government control and regulation of these few entities.
First came mining pools, in which large numbers of miners combine resources and share mining awards in order to receive frequent, predictable payments rather than waiting and hoping for a single large award. The largest pools have already breached the point of having a majority of the network’s computing power, where they would have the capability of seriously harming the network. Second, hobbyist and small-scale miners have been getting knocked out of business, pool or no pool.
...
Centralization of PoW mining is problematic for several reasons. First, centralization of mining power represents a severe security risk. Any entity (or entities working together) that controls 51% or more of the network’s computing power can seriously harm the network. Second, when there are only a few, highly-capitalized entities that control the network, the entire network becomes susceptible to government control and regulation of these few entities.
NoKoin is the combination of PoW disadvantages and PoS disadvantages.
I don't believe Neucoin will have the centralization problems that Bitcoin has. Unless I'm mistaken, in a PoS coin, like Neucoin, you have to transfer your balance to the pool in order for it to mine for you. For someone with $100, this isn't such a big deal, but someone with $10K would have to worry about the security implications of doing this. It would be akin to leaving your balance "on the exchange", which many people have been burned by.
So, the little guy trades security for earning a lot of extra compounded interest by joining the pool. However, the whales, and I use that term loosely, holding more than around $1K, would rationally keep their coins under their own control, since they can earn almost the maximum compounded interest by themselves and the risk of losing their coins in someone else's hands isn't worth it.
So, then, the number of holders of $1K or more independently mining will keep centralization from happening.
Compare this against the huge centralization flaw that bitcoin has right now, where only 3 miners are necessary to collude to run a 51% attack! (From here you can see that it would only take 3 of the biggest miners to collude to reach 51%: https://blockchain.info/pools). Due to economies of scale, this can and will eventually occur with any PoW coin that currently exists, and is the reason the future of PoW is not too bright right now.
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BTW, what is the problem with coinage the way Neucoin implements it? I have no idea why it is, according to jonald, "broken".
