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I see that Vitalik and Vlad are working on Casper. As far as I understand, casper is the new POS mining algorithm. Why is it better than bitcoin's POW? I understand it's environmentally friendly, but isn't just vulnerable to ownership bias and 51% attacks from large ether holders?
What does this mean in plain English?
There are a number of reasons I much prefer Casper over PoW:
In PoW, any coalition of >50% (or 25-33% if selfish mining) can very profitably censor and revert history. In Casper, it takes close to 100% of bonded validators to collude, to censor profitably. Additionally, finalized blocks cannot be reverted by any amount of byzantine behaviour.
Casper is designed to make it as expensive as possible for a supermajority of byzantine nodes to undermine protocol guarantees. Supermajority-of-hashpower attacks on PoW, OTOH, are very profitable.
The ideal is to have a model where consensus is as cheap as possible for everyone, except for adversaries while they are conducting an attack. PoW has to be more expensive for everyone at all times than an adversary might be able to spend at any time. Security-deposit based PoS can make very large efficiency gains, in terms of economic security provided per unit of fees + issuance.
Also, block finality and the concise nature of economic proofs from security deposits makes Casper much more light client friendly than will ever be possible with PoW.
Hope this helps!
A different explanation of Casper was written by Vlad. Some of the points from the post include:
Vitalik's post talks about how validation can be based on bets, much like a prediction market. Since the incentive is to converge on the truth, the result should be that large value will back the likely truth quickly and "finality" becomes a sliding scale of how much value you want to back that particular transaction. In other words, wait as long as you're comfortable with.
Another way of looking at it, is that consensus-by-bet is a superset of all consensus protocols. Vitalik wrote:
Consensus-by-bet can be seen as a framework that encompasses this way of looking at proof of work, and yet also can be adapted to provide an economic game to incentivize convergence for many other classes of consensus protocols.
