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Comment by konschubert | Hacker News Reader

In Pow, Money buys you mining capacity which is voting rights.

But you have to trade it away to buy the machines. That's very different from giving power to the people holding lots of coins.

Especially because mining is a business that you can fail at if you don't balance costs and income properly.

That's much preferable to proof of stake where early investors can just squat on their coins indefinitely with almost zero cost to maintain their authority percentage forever.

Except if the community at large doesn't like how a particular staker/validator is doing their job, the staker's assets can be burned in a hard fork that enjoys sufficient broad legitimacy. The capital can be outright destroyed. In contrast, there is no way a community in a proof of work system can burn a particular miners hardware if that miner becomes able to abuse the network. At most they could change the mining algo, but that wipes all miners out, and such a change can really only happen once.

In PoW miners buy physical capital and electricity, in PoS miners buy digital tokens. It's exactly the same, except PoS is less detrimental to the environment.

It would be the same if holding a token from a PoS system cost money. Since it doesn't, then it is definitely not the same thing.

Of course it costs money, holding a token has an opportunity cost.

The opportunity cost of not investing is in a different ballpark from spending that money on machines and electricity.

You don't know that. Moreover PoS can require that the tokens be spent permanently (not just deposited somewhere).

Yes I do know that parking money is a different ballpark of cost from spending money.

> Moreover PoS can require that the tokens be spent permanently (not just deposited somewhere).

Is that really a "stake"?

So you're saying you know that an unknown quantity is greater than another unknown quantity.

I'm saying they have massively different risk profiles.

If you want a different example that might be more obvious, "put it all on a single number on a roulette spin" and "invest in a big stock index" both have unknown rewards but they're entirely different ballparks too. (And no, those aren't supposed to map 1:1 to the coin scenario.)

I don't think I follow you. As far as I can tell, PoS is as much of a lottery as PoW. In PoW a player increases their chances of winning the lottery by spending real money on electricity. In PoS a player increases their chances of winning the lottery by spending real money on virtual tokens. The outcome should be the same, except that no electricity is wasted in the case of PoS.

At any point you can turn your tokens back into something else. And in theory the price is sufficiently stable or you wouldn't be doing anything with crypto.

Mining machines deprecate and electricity cannot be refunded. It's a production business, and that money is spent.

What is the equivalent of electricity being burnt in a PoS system? I am not seeing that cost. Not opportunity cost -- which also exists for mining Bitcoin -- but direct cost.

It depends on how it's implemented. PoS works by offering a randomly selected stakeholder the authority to update the blockchain. [1] One way this can be done is by requiring stakeholders to deposit a stake with a smart contract that charges negative interest. I don't know how current implementations of PoS work, but this doesn't look like rocket science.

[1] https://doi.org/10.1093/rfs/hhaa075

It's true that in every field known to man, money buys influence, at least in some broad and hazily-defined sense of the word.

But the form of influence that can be bought in btc is not voting rights for what happens with the asset, not in any direct way. The distinction matters here.

Mining BTC doesn't get you voting rights at all. The core devs will still make pants on head retarded changes and the centralised exchanges will dutifully trade their trash output as if it were really bitcoin, mining just gets you the right to maybe profit on rubber stamping their trash depending on market conditions.

BTC has no mining. Only rubberstamping.

Tell that to the BCH investors

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