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An interesting idea I've been pondering is PoS' effect on wealth distribution and inequality. Its clear that this system exhibits the phenomenon of "wealth bege
by gvhst 8y ago
An interesting idea I've been pondering is PoS' effect on wealth distribution and inequality. Its clear that this system exhibits the phenomenon of "wealth begetting wealth," which isn't that different from our current society. However, the real kicker here is that the more wealth you have on a PoS network the more control you have over the network. This is baked into the system by construction, whereas in our current framework of wealth this is merely a correlation which can be controlled via legislation.
- perfmode 8y agowealth is a correlate for control over legislation
- api 8y agoPoW has economies of scale that reward existing wealth too.
- konschubert 8y agoNot just economies of scale. PoW IS a proof of capital. "I can buy one million dollars worth of mining hardware and wait a year to earn my money back" is a proof of capital.
- xwvvvvwx 8y agoWhile it's true that the barriers to entry are quite similar in both (Eth 2.0 PoS depost is approx the same as 1 good bitcoin ASIC). However, the dynamics wrt capital are different in PoW, and it's probably more accurate to say that it represents proof of captial _burned_ (miner depreciation & electricity costs).
- konschubert 8y agoNot capital burned, because it's reimbursed by the network via fees.
- wmf 8y agoWith PoW all you get back are block rewards and fees; your hardware and energy are burned. With PoS you get block rewards and fees and you get your original stake back. Of course at equilibrium this means the rate of return from staking can be much lower.
- konschubert 8y agoIt also means that a network based on PoS is much cheaper to maintain if we assume equal RoI between PoS and PoW. This is great and should give PoS a competitive advantage.
- kiriakasis 8y agomoreover the problem with PoW is that you can move your investment between different coins.
- koalala 8y agoSurprisingly, that isn't true [1]. I and others (link in the article) have shown that inequality actually (although quite slowly) decreases in PoS systems. [1] https://hackernoon.com/introducing-reputation-weighted-proof-of-stake-part-1-27c9d05b46f2 https://hackernoon.com/introducing-reputation-weighted-proof...
- gruez 8y ago>Surprisingly, that isn't true the linked article is light on details, but the source given in that article makes the following conclusion >The Matthew Effect, where the rich get richer, is not much of a concern for Ethereum on a Proof of Stake issuance schedule, since the platform more or less in a steady state of relatively extreme wealth inequality