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I'm not sure of the argument - so it results in rich get richer In PoW, the same 'rich get richer' applies - miners can buy more mining rigs and thus it com

I'm not sure of the argument - so it results in rich get richer In PoW, the same 'rich get richer' applies - miners can buy more mining rigs and thus it compounds the same? miners invest heavily in constantly innovating and investing back into the network In PoS, is this not exactly the same, if not even more true? Stakers are by definition highly invested into the network The whole system could collapse overnight like a domino if something goes wrong Could you elaborate on this, why is this more likely in PoS over PoW? PoW had decreased decentralization substantially to only happen in regions where electricity is the cheapest. PoS at least prevents this problem.

cocktailpeanuts 6y ago
> so it results in rich get richer In PoW, the same 'rich get richer' applies - miners can buy more mining rigs and thus it compounds the same? In theory, if and when proof of mining actually becomes the mainstream vehicle for global financial transactions, simply buying more mining rigs won't be enough. They will need to institutionalize and reinvest heavily into their infra. The mining rig that could find ten blocks yesterday may only be able to find one block tomorrow if the competition becomes fierce. Since it's a permissionless system, if one miner starts doing it and makes a lot of money AND Bitcoin gets accepted as a legitimate payment network, other companies will enter the space and the competition will accelerate. That can't happen with PoS. > miners invest heavily in constantly innovating and investing back into the network In PoS, is this not exactly the same, if not even more true? Stakers are by definition highly invested into the network The difference is in continuous investment vs. one time investment. With proof of work (again, assuming when these models actually work as designed), you will need to invest more and more into the infrastructure as a miner to stay profitable. As a result the entire network becomes more and more secure. But with proof of stake, the stakers do not have incentive to compete in this manner. With proof of stake, you can literally throw around money to gain influence over a network. With Proof of Work that's not enough because you have to "keep investing", so you need actual commitment to the future. That's much stronger security than a network made up of people who only care about the present. > PoW had decreased decentralization substantially to only happen in regions where electricity is the cheapest. PoS prevents this problem. This is like saying "Riding car is dangerous because people can get hit by a car and die. Walking prevents this problem." There's always a solution for every problem. Even the decentralization. The only reason why that hasn't happened is because the Bitcoin network is not worth that much when it comes to its value as a payment system. That doesn't mean there is no solution. For example, using certain clever hashing algorithm, multiple miners can specialize and only do things that each location is optimized for. Mining doesn't just involve hashing. You can generate revenue through including more transactions in a block, for example.
- postcynical 6y ago
  > With proof of stake, you can literally throw around money to gain influence over a network. But can't you do the same with PoW. You just throw money at minners and buy their rigs or rent them for a good premium.
  - cocktailpeanuts 6y ago
    A Bitcoin miner that can 51% attack the network will need a huge factory full of mining rigs. A proof of stake miner who wants to 51% attack doesn't need that.
    - opreturn 6y ago
      .. that factory full of rigs and a power plant with the capacity of Arkansas Nuclear One
      - nvdr 6y ago
        That or maybe just a few colluding mining pools. The network is only 'secure' because mining cartels own most of the specialised hardware, increasing difficultly. ETH 2.0 starts to pool all that power back abit, by allowing others to compete for staking rewards.
    - qixxiq 6y ago
      ... and now you get to my point why I argued ETH2 is likely better on the security front. Bitcoin needs a huge factory. ETH2 needs a billion dollars. I feel like a billion dollars could probably buy the factory you're talking about. ETH2 also takes time to add new stakers to the network, but perhaps not as long as building the factory. If you did this with BTC you'd cause a huge drop it the value of the network, and therefore your investment in miners If you did this with ETH2 your investment would be destroyed by slashing, and the network might survive ... also keep in mind the Bitcoin factories already exist. You just need to buy one or two, or perhaps hack some of the mining pools. I prefer the ETH2 semantics.

cocktailpeanuts 6y ago

> so it results in rich get richer In PoW, the same 'rich get richer' applies - miners can buy more mining rigs and thus it compounds the same? In theory, if and when proof of mining actually becomes the mainstream vehicle for global financial transactions, simply buying more mining rigs won't be enough. They will need to institutionalize and reinvest heavily into their infra. The mining rig that could find ten blocks yesterday may only be able to find one block tomorrow if the competition becomes fierce. Since it's a permissionless system, if one miner starts doing it and makes a lot of money AND Bitcoin gets accepted as a legitimate payment network, other companies will enter the space and the competition will accelerate. That can't happen with PoS. > miners invest heavily in constantly innovating and investing back into the network In PoS, is this not exactly the same, if not even more true? Stakers are by definition highly invested into the network The difference is in continuous investment vs. one time investment. With proof of work (again, assuming when these models actually work as designed), you will need to invest more and more into the infrastructure as a miner to stay profitable. As a result the entire network becomes more and more secure. But with proof of stake, the stakers do not have incentive to compete in this manner. With proof of stake, you can literally throw around money to gain influence over a network. With Proof of Work that's not enough because you have to "keep investing", so you need actual commitment to the future. That's much stronger security than a network made up of people who only care about the present. > PoW had decreased decentralization substantially to only happen in regions where electricity is the cheapest. PoS prevents this problem. This is like saying "Riding car is dangerous because people can get hit by a car and die. Walking prevents this problem." There's always a solution for every problem. Even the decentralization. The only reason why that hasn't happened is because the Bitcoin network is not worth that much when it comes to its value as a payment system. That doesn't mean there is no solution. For example, using certain clever hashing algorithm, multiple miners can specialize and only do things that each location is optimized for. Mining doesn't just involve hashing. You can generate revenue through including more transactions in a block, for example.

postcynical 6y ago
> With proof of stake, you can literally throw around money to gain influence over a network. But can't you do the same with PoW. You just throw money at minners and buy their rigs or rent them for a good premium.
- cocktailpeanuts 6y ago
  A Bitcoin miner that can 51% attack the network will need a huge factory full of mining rigs. A proof of stake miner who wants to 51% attack doesn't need that.
  - opreturn 6y ago
    .. that factory full of rigs and a power plant with the capacity of Arkansas Nuclear One
    - nvdr 6y ago
      That or maybe just a few colluding mining pools. The network is only 'secure' because mining cartels own most of the specialised hardware, increasing difficultly. ETH 2.0 starts to pool all that power back abit, by allowing others to compete for staking rewards.
  - qixxiq 6y ago
    ... and now you get to my point why I argued ETH2 is likely better on the security front. Bitcoin needs a huge factory. ETH2 needs a billion dollars. I feel like a billion dollars could probably buy the factory you're talking about. ETH2 also takes time to add new stakers to the network, but perhaps not as long as building the factory. If you did this with BTC you'd cause a huge drop it the value of the network, and therefore your investment in miners If you did this with ETH2 your investment would be destroyed by slashing, and the network might survive ... also keep in mind the Bitcoin factories already exist. You just need to buy one or two, or perhaps hack some of the mining pools. I prefer the ETH2 semantics.