Since Proof of Stake Makes the Rich Richer, somewhat similar to Proof of Work mining pools/cartels, why do we still want to move towards Proof of Stake, assuming environmental concerns are not a concern?
closed as primarily opinion-based by Raghav Sood, Richard Horrocks, Meshugah, Roman Frolov, Ismael Aug 9 '18 at 23:27
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I'm guessing this will probably be closed due to its opinion-based nature, soon... but onwards!
If PoS and PoW both make the rich richer to the same extent but PoS does it with a smaller environmental impact, ceteris paribus, should we not all want PoS? Of course, the premise of this is flawed, but not fundamentally more so than the premise of the original question.
Attacking PoS is probably more expensive than attacking PoW. Why? Supposing someone has no ether but wants to attack the system.
Consider attacking PoW: Cost of attack increases with amount of hashing power currently available which scales with price. But the cost of attack will likely not exceed the annual amount of ether produced by PoW divided by the real interest rate of a benchmark currency; this is because economically-minded actors are better off either buying ether or keeping their money in loans denominated in government-issued fiat if mining yields the same ROI as holding a bond. So, if say the US interest rate is 3% and the inflation rate is 1%, then the real interest rate is 2% = 0.02. Presently, around $4B USD of ether is generated per year, so there is less than $200B of mining equipment employed (and, in reality, because Ethereum is currently highly speculative, it would only cost ~$5B to perform a 51% attack right now). Further, given Ethereum's inflation scheme, the attack is bounded by the supply of new ether being produced.
Consider attacking PoS: Economically, it probably wouldn't hurt the Ethereum ecosystem to tie up, say, 50% of ether in staking (but you wouldn't want to keep an inflation rate that high). Indeed, due to fractional reserve banking, a large chunk of money in the US is probably just tied up in such a fashion -- more than M0 itself! So for someone to attack PoS, they'd need to buy up enough ether to make that happen. But using the supposition that the attacker starts with no ether, they'd have to acquire 25% of ether and stake it to match the other stakers' stake. Presently, that's nearly $10B. Furthermore, attempting to acquire 25% of ether quickly is likely going to cause an escalation in price.
So, conducting this simple thought experiment, we can see that PoS will continue to become more expensive relative to a PoW scheme (that isn't extremely inflationary), ultimately making it more expensive to attack. I think that is one argument in favour of PoS.