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Not 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 proo
by konschubert 8y ago
Not 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.