It also changes the distribution of mined coin. Whereas currently it takes an equal mining cost to reap an equal reward, proof-of-stake rewards those who already have enough to stake. This is essentially a recreation of the inflation system we have in the fiat world, where printed money first goes to the government, who can spend it at its current value, eventually having it entropy out to other users through spending, at reduced purchasing power. This makes the rich richer, and increases inequality of savings in the network.
So it's not exactly the same refrigerator, so to speak.
As opposed to people who have money buying mining hardware to make more money that can be invested into mining hardware?
Proof-of-stake is completely unlike this. People who "have" are not required to exchange any effort to reap new reward. They retain purchasing power while the "have-nots" lose purchasing power.
I dunno if I struck a nerve with you with these points about proof of stake or something. I'm not completely against it - I think it should be tried, and Ethereum is a great network to try it with. But I also don't think it's completely perfect. I also think proof-of-work is very defensible and likely to succeed in unexpected ways.
Entry costs in PoS are significantly lower; you just need a consumer-grade computer, broadband and the electricity to power a consumer-grade computer (i.e. of the order of 100 W). In PoW, you need specialized equipment (ASICs), larger amounts of energy (of the order of 1000s W) and broadband, this equipment will also need be renewed every few years.
The minimum stake of 32 ETH (in the case of Ethereum) can be avoided by using pooled mining, so that's not a true barrier of entry.
Being a validator still requires effort, you need to set-up and maintain the infrastructure and guarantee sufficient availability (higher than 2/3 of the time) to avoid being penalized. As with any economic activity where there is ample competition in the end the profit margins will be quite thin, so presenting this as free-money for the "haves" is just dishonest. If staking rewards are too high, more people will be tempted to stake, reducing the staking rewards, if they get too low some people will be disincentivized to stake and stop doing so, raising the rewards. This will tend to balance around just marginally profitable. This also happens in PoW mining. Main difference being that due to the low entry costs in PoS this economic activity is accessible to a much larger amount of people.
You can find here a graph showing the staking rewards vs total staked ETH.
Proof-of-stake doesn't require this natural, market-driven redistribution. It exchanges it for an inflationary process that further separates the rich and the poor.
They're fundamentally different.
Do you want an example?
> If you mine and do not sell, you perpetually consume and fail in short order.
With ETH you can mine ETH, lock in a MakerDAO vault and pay your operations with very low-interest DAI and use that to finance all your operational costs.
As long as your profit from mining is higher than the interest from minting DAI (which is very easy to do), you can mine forever without ever giving up the original ETH. Your only limitation would be in how many people would be willing to buy all the DAI you will be minting.
This is no different than a PoS system, except that it still has to bear all the PoW costs and externalities.
Which ones? I don't believe I am, they're just not the point being discussed here.
In other words, you are ignoring (not paying attention, leaving aside) an aspect that should be considered.
(You asked for a good-faith conversation, but after these types of replies it gets hard to take you seriously. The quote "It is hard to get a man to understand something when his salary depends on not understanding it" becomes more and more apt with each response you give.)
I'm not sure how your quote applies, my salary doesn't depend on Bitcoin.
Read again. I described an mechanism that you can be a miner of a PoW mechanism and still be able to finance your operation without selling the asset you mined, effectively turning the economic model of it from PoW into PoS, while keeping the horrible externalities and costs of PoW.
Don't forget, those that do not have enough to stake can pool their resources together.
P.s: tell me where in the world you can open a bank (not a bank account, but an actual bank which can receive deposits from Central Banks) with only 10-20k USD.
P.P.s: There is growing talk about existing central banks that are considering issuing their own blockchain version of their currencies, bypass large banks and have money go directly to people through controlled accounts. It would be basically be a Government-sanctioned version of Tether/USDC/EURS.
That's great! And makes a lot of sense. However, it still requires locking capital. Those who do not have a lot of money, spend a much higher percentage of their money, and therefore need it to be liquid. So though pooling may reduce the effect of inflationary rich-poor inequality increases, I don't think it would eliminate it.
Well, duh. No system will ever be perfect and there will always be costs associated with BFT systems. The question is knowing how these systems compare with one another and what kind of trade-offs are there.
It is impossible to dispute that the costs of keeping a PoS-based system is overall lower than the current state-of-the-art, yet you try to knock PoS while ignoring all the analog issues with PoW? Your cognitive dissonance is showing.
That is very questionable.
This pattern seems to be everywhere. Cheaper electricity: more electricity used. Bigger roads: more miles travelled. More efficient engines: bigger, more powerful cars. Plastic recycling: more plastic used. I challenge you to find any improvement in efficiency which has led to a reduced footprint.
What's more likely is you have spent the money saved on something else.