All these systems have "whales" such that the individual can't do much except align with a whale. Applies to more than just crypto, too.
Cryptocurrencies might not be perfectly immune to centralization, but even with their problems they're far less prone to centralization than any other sort of currency short of reverting to gold coins or seashells - and you can't exactly use gold coins and seashells for online payments.
That's not how PoS works, though?
The difference with slashing is that forking is no longer "free" as each fork penalises members who only support the other fork. Let's consider your example in PoW and PoS with slashing. In PoW both chains would continue and miners can freely switch - their funds are also duplicated. In PoS those that support each chain will eventually be locked in, and penalised if the other chain "wins".
This doesn't prevent all (or effectively enough) stakers being coerced/forced by a powerful enough entity, but that's a social problem that no consensus algorithm can resolve - just as if effectively everyone was a bad actor.
Which governments, saying to whom? And how would they enforce it? What would be the consequences for those that didn't comply?
There are other proof-of-stake blockchains other than Ethereum, and for those it has indeed worked quite well in practice.
Not to mention that no one would be interested in using any network where this level of centralization could pose a real threat, and the most likely outcome of such a scenario would be a loss of the value of the native token.
Who would be interested in using any network which exists only for the profit of the existing stakeholders? Why not just fork it?
This already happened once with Ethereum.
Those that decide against the fork stayed on what became "classic".
In the end, that's what really matters.
It would be more interesting to discuss new flaws in the protocol, or things that generally haven't been discussed before.
Large miners do have power, the power to destabilize the system. The same power large POW syndicates have that delays POS will be there in POS only in a more direct literal way.
What do you think will happen if a more decentralized verification system will be proposed once there are people and institutions that will have large sums of invested money and effort? do you think that they will just give away the financial power they have? this is not how any system involving human works and cryptographic technology is not going to change that.
How is a system that allows people with ~$30k to have any type of influence worse than the status quo?
2. Mint NFTs representing land parcels and persons
3. Collect land value tax from all holders of parcel NFTs
4. Disburse dividends to all holders of personhood NFTs
5. Bask in the glory of Crypto-Georgism
(Disclaimer: I have no idea how practical this is, but it sounds fuckin' rad.)
Also it would suck for mennonites who don't want to use technology.
Also applies to, e.g. USD spent on amazon, casting votes in bipartisan elections, paying taxes, etc.
It is a fundamental aspect of modern capitalist organization of wealth. It is worth assessing the rate at which it is being concentrated, which for USD is a historically unprecedented rate.
In a functioning system it's a property that reflects the time-value of money.
In cryptocurrency, there is no need for such a property. Any altruistically-designed cryptocurrency would have inflationary tokenomics.
It's easy to believe in M1 and even M2 USD, but when you look at M3 and FR policy driving continuous unending inflation, I think you'll find proof-of-stake to be Robinhood level egalitarian by comparison.
Btw you can stake less than 32 eth on plenty of services.
ETH and USD are not comparable. The US Government secures real-world business operations themselves, while cryptocurrencies merely secure payments.
Who pays the price of USD inflation? It's largely not Americans. It's a net transfer of wealth from the satellite economies (that the USA secures through its military presence) to the USA. Not to mention, (an appropriate amount of) inflation promotes actual spending.
Cryptocurrencies are not economies, they are merely payment networks. They should be useful as payment systems. They should primarily serve to provide value to those using them as payment systems, not investors, developers, inside traders, stakers, miners, or any other middleman. The moment that it's more favorable to become a middleman than to use cryptocurrency for it's intended purpose is the moment that the dynamics of the system switch from payment network to ponzi scheme.
Cryptocurrencies SHOULD NOT favor early investors. They SHOULD have inflation in the form of a block reward, which ensures the security of the network for those that USE cryptocurrency at the cost of those who merely OWN it.
You can't escape consequences forever.
You can influence the payment processing. And if the crypto would allow false payments, it’s value would immediately drop to zero. The more money you have invested, the higher your incentive to keep it’s value stable.
PoS validators have the power to propose new blocks and attest to the chain head. They cannot change the state transition function to allow false payments, just as BTC miners cannot use their block proposal power to mint arbitrary coin amounts.
PoS has a concept called "block finality", where once a block has been marked finalized it cannot be reorged without committing to getting slashed for 1/3 of total staked ether (several billion dollars). Blocks typically get finalized after 6 minutes. This is possible because you can explicitly check whether validators have voted (attested) for two separate blocks at the same chain height.
It is not obvious to me that an agent with higher investment should be allowed to notarize the payments. The system should generally work for the benefit of the users, not the HODLers, developers, miners, stakers or any other special interest group.
P.S. I think PoS is a major downgrade in decentralization. At that point, you might as well just use classical consensus: it's more secure as your relationships with notaries are explicitly established as opposed to choosing whoever happens to have the most coins.
That is exactly how Proof of Work works as well.
What makes PoW and PoS implementations like Ethereum's capture resistant is that they are governance-free, so capital is NOT used to influence governance. It is only used as a signal that is costly so as to prevent Sybil attacks.
This is very misinformed. There is no governance by stake vote in Ethereum. The protocol is immutable absent a user willingly updating their node software to run a different protocol.
Stake is used exactly the same way hash generation hardware is used in PoW: to determine what share of blocks a person produces. This is safe in both Ethereum PoS and PoW as long as the assumption that 51% of block generation capital (stake, and hashing hardware, respectively) is controlled by honest parties holds true.
What did you say? the more you have of the capital the more you influence the system? what a novel concept!
Monterey and legal systems based on structures that are at least partially built to take care of the needs of people of similar culture and geographic area? YUCK! Machine enforced plutocratic system where early adopters and syndicates have absolute power?! SIGN ME THE FUCK UP!