I'm curious to understand, how necessary will Ether be after the Ethereum network moves to Proof of Stake?

I guess stake holders will be rewarded with Ether for voting on the correct next block. Would love to hear your thoughts on this.

It is absolutely necessary, because any form of Proof of ... requires those who secure the network to be rewarded. The goal of any consensus form is to attract many nodes to a game like roulette. The winner can confirm the authenticity of the last block and wins a reward. Because the winners are randomly selected we say that with many confirmations we are approaching certainty that the block is not tricked with double spends etc. What is not necessary is the creation of new crypto once the system has settled. This is because the miners can be rewarded with the transaction fees.

  • Thank you for your answer. So with that logic in mind, supply will be a lot more controlled and limited? How will new Ether be created or supplied? – P. Pan Jul 2 '16 at 15:09
  • It is not necessary to restrict supply, it is a just a choice that dev team can make. It is not even necessary to create new Ether, because Ether is divisible into so many Wei. ethereum.stackexchange.com/a/574/264 – Roland Kofler Jul 2 '16 at 15:14
  • basically the monetary inflation is purely a political thing now, because we have 80 million Ether. If you want that the early holders get rich, pick zero, if you want to distribute to future adopters pick some high rate. – Roland Kofler Jul 2 '16 at 15:16

It's necessary, because the miners or "validators" put some money on stake. Here is a description of the finality circle by V Butterin, which gives some good explaination of how it works :

http://vitalik.ca/files/finality.html

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