This is the story of every proof-of-work cryptocurrency. After a certain point, they only serve to make the rich even richer. Look at Bitcoin for example, where over 50% of the hashing power is controlled by big Chinese mining operations.
(Of course that's pretty much the point of the analogy.)
Your cost basis in the underlying coin is by far the largest determinant of ROI.
It’s like the old real estate adage: “money is made on the purchase, not on the sale”.
Fairness of mining has always been virtually irrelevant to ROI.
(Except insofar as accusing competitors of shades of mining “impropriety” supports a narrative — and invariably a narrative which disproportionately benefits investors with an ultra low cost basis in a benefactor to said narrative.)
“China miners, special deals” etc — it’s a trope that’s been going around for about a decade.
Virtue signaling aside, judging by the raging bull market for ICO coins amongst cryptocurrency investors, clearly no one is concerned with fairness whatsoever. These things are majority premined by insiders and/or sold to prestigious investors in pre-pre-pre ICOs (yes, there are “levels”). What happens is the general public gets sucked into these coins then adopts narratives which suit them. That’s what you’re seeing here. Not that anyone cares.
(Disclosure: I’m invested in a true hybrid PoW/PoS coin, and I’m rather familiar with the downsides of both PoW and PoS mining.)
Proof-of-Work miners have ongoing variable expenses to contend with — electricity cost being the major one.
Conversely, in “Proof-of-Stake”, mining is virtually costless, because it's enough to show you have money to then earn money with your money.
(Disclosure: I’m invested in a true hybrid PoW/PoS system, so I’m familiar with the downsides of both.)
That's certainly true with a very simple PoS mechanism. I don't think that type of PoS is used in practice with any major cryptocurrency (please correct me if I'm wrong though).
The one I'm most familiar with (Cardano) uses delegated proof of stake, so users delegate their stake to a stake pool and share in the rewards. The platform supports, encourages, and enables this for users with only very introductory understanding of Cardano.
Stake pools also suffer a penalty when they amass too much stake (their rewards decrease), so decentralization is encouraged and no one would be able to get, say, 50% RoA by owning of 50% of the Cardano currency (ADA)
Longer answer: The most you can get from staking is an annual 6-7% return on your stake. I don't fully understand how their saturation parameter works, but here's the general idea: Currently a stake pool with .2% of all ADA staked is considered 'saturated'. This means (in my working understanding, I suspect things are a bit more nuanced) that ADA delegated to them beyond that .2% doesn't receive additional rewards. Therefore it's in the delegators' interest to avoid delegating to pools with greater than .2% of all ADA, and oversaturation works against the stake pool operators as well.
What this means in practice, is that this theoretical group owning 50% of ADA could set up 250 stake pools and fully saturate them for maximum profitability. However, other users can also delegate to those stake pools and share in the rewards. While the operators may receive 1-2% more rewards than non-operating users (there's a limit to how much 'extra' the operators can take, but this extra percentage is intended to incentivize running stake pools), at a certain point of oversaturation (if their pools are profitable enough), it would make more sense for them to just add more stake pools to (or delegate to other pools which are under-saturated) rather than let their existing pools be significantly oversaturated.
cardano.org has an insightful blog post: https://iohk.zendesk.com/hc/en-us/articles/900004671183-Chan... and a useful calculator: https://cardano.org/calculator/?calculator=operator
which are both worth looking at if you're interested in knowing more
I don't consider this a problem but it's a fact that PoS works that way.
I do like that cryptocurrency platforms can put limits on "how much" leverage they get, to significantly close gap between potential "percentage" return on investments between wealthy and 'poor', and remove the ability for third parties to operate which give preferential treatment to people with high concentration of total market cap.
If you own 1 billion USD, then sure, you're going to get a larger return on investments (when measuring in USD) than someone with 100 USD, even if the percentage RoA was the same. Because of how classical economic systems work though, these are very grossly disparate. Someone with 1 billion USD may be able to generate 5-20% return on investments in a year, whereas someone with 100 USD would be lucky to get 3% (certainly, larger returns are possible with luck and wise investments, I'm talking purely in the aggregate over low-risk investments, like holding your money in an account which pays interest).
But let's assume the person with 1 billion USD and 100 USD are both getting 1% interest annually; the person with 1 billion USD is still making more money from investments because they have 999999900 more USD which they are investing.
PoS doesn't solve that latter problem, but it can close the gap on the return expressed as a percentage of investment
IIRC it didn't work for long (the of promoters of these tokens were likely well aware of this), and ASICs for them appeared anyway, once an ROI probability threshold was reached.
The example you gave has nothing to do with changing the PoW function to counteract ASICs. Both Bcash and bitcoin classic were forked because of completely different reasons, and had people who believed in those reasons defend the new forks and run the node software etc. For example XMR has been doing ASIC-deterrent forks for years now with great success.
Also it seems clear that Monero’s purported “ASIC resistance” is very much a social contract — requiring constant vigilance to uphold — one which isn’t guaranteed to be strictly adhered to over the long run, particularly as the cost/benefit analysis gets murkier.
Just like the rest of the cryptos that require all the participants to use specific protocol and software and agree on specific rules.
If one has control of 51% of the network it's in one's best interest to keep that network going successfully. Sure, there's suicidal malcontents and those that just want chaos. But barring some brain cancer it's very difficult for individuals to throw away billions of dollars. Because if a 51% attack works it's not going to work for long, the corrupted blocks are going to be immediately known, and everyone else will just fork off and leave that 51% attacker holding the bag.
It’s the people insinuating impropriety of Proof-of-Work mining in the hopes of less than transparently promoting a competing premined/ICO’d Proof-of-Stake cryptocurrency sans any form of disclosure statement. You know, the sort of thing that’s been plaguing the cryptocurrency space for a good, solid decade now?
Anyway I'm not talking about direct competition, I'm talking about parasitism.
Much if not all of the anti–Proof-of-Work narrative and the debunking thereof can be characterized by Brandolini’s law [1]. ITT “Sure, the overwhelming majority of `$COIN` was premined by insiders or sold to prestigious investors for pennies in exclusive pre-ICOs, but look over there — Bitcoin mining is oh-so-unfair. Disclosure statement? What’s that?”
All the financially-motivated disbursal of misinformation takes a considerable amount of time to debunk, hence the parasitism component.
I would be ok with Bitcoin having had a 10% pre-mine if it also had a pre-sale, rather than limiting it to those technical enough to mine it on day one.
“On day one” it was possible to CPU mine Bitcoin on any ordinary Windows PC using a freely available open source GUI application.
If they held bitcoin would their opinion matter more or less? Why should it matter?
I guess in a way comments like these are actually a really good indication that PoS is superior in virtually every way.