5 ms·

In PoW, the "rich" have to keep selling their coins to buy more dedicated mining equipment in order to stay competitive. And because PoW hasn't reached "optimum

by jude- 5y ago

In PoW, the "rich" have to keep selling their coins to buy more dedicated mining equipment in order to stay competitive. And because PoW hasn't reached "optimum efficiency," there's still profits to be had by building better miners and cheaper power sources. Innovations here have positive downstream effects, since innovations in cheap renewable power and efficient chip fabs and designs have many applications beyond mining. PoS, on the other hand, requires minimal extra work from the already-rich. They just sit on their butts getting richer.

nscalf 5y ago
It still doesn't change the underlying issue you discussed. Just because there is some friction removed in PoS doesn't mean that PoW isn't weighted to favor people with large pools of capital to invest.
- jude- 5y ago
  That "friction" is a feature, not a bug. The "friction" generates second-order benefits for society.
  - SwagtimusPrime 5y ago
    benefits like killing the environment.
Taek 5y ago
It's a well established result in PoW that a small constant improvement in efficiency (say, one mining farm is 5% more efficient than others) turns into an exponential advantage in hashrate over time if the profits are continually re-invested into building more hardware.
- jude- 5y ago
  Yes, exactly. It's not a case of "rich get richer," so much as it's a case of "capital is continuously and irreversibly re-invested." In equilibrium, mining breaks even.
  - SwagtimusPrime 5y ago
    mining is actually worse because of economies of scale. rich miners don't need pools so they don't pay fees, they get bulk deals and earlier access to the newest ASICs, they can pay personnel to optimize their operations, etc. so over time, the rich miners get richer at a faster rate than poor miners. whereas under PoS, everyone gets the same % return (unless you stake with a pool, but even then you don't have these economies of scale like with mining.)

by jude- 5y ago

nscalf 5y ago

It still doesn't change the underlying issue you discussed. Just because there is some friction removed in PoS doesn't mean that PoW isn't weighted to favor people with large pools of capital to invest.

jude- 5y ago
That "friction" is a feature, not a bug. The "friction" generates second-order benefits for society.
- SwagtimusPrime 5y ago
  benefits like killing the environment.

Taek 5y ago

It's a well established result in PoW that a small constant improvement in efficiency (say, one mining farm is 5% more efficient than others) turns into an exponential advantage in hashrate over time if the profits are continually re-invested into building more hardware.

jude- 5y ago
Yes, exactly. It's not a case of "rich get richer," so much as it's a case of "capital is continuously and irreversibly re-invested." In equilibrium, mining breaks even.
- SwagtimusPrime 5y ago
  mining is actually worse because of economies of scale. rich miners don't need pools so they don't pay fees, they get bulk deals and earlier access to the newest ASICs, they can pay personnel to optimize their operations, etc. so over time, the rich miners get richer at a faster rate than poor miners. whereas under PoS, everyone gets the same % return (unless you stake with a pool, but even then you don't have these economies of scale like with mining.)