iownzerobtc

Have you seen Art Basel lately? It is a IRL crypto party.

I haven’t looked through the entire thread but the challenge of recovering from a PoW 51% attack is that the attacker still holds ASIC mining power and can re-attack each new fork. The same is not true in PoS where the attacker’s funds can be targeted and effectively depleted in a fork, leaving it prohibitively expensive for the attacker to continually attack each new fork.

See the “spawn camping” description and defence in my prior link.

All blockchains require social coordination. How do you think Bitcoin operates? A protocol is developed and some facet of society decides to build a client to support that. Somebody adds a new BIP and the network of users may decide to coordinate in order to upgraded the protocol (soft or hard fork).

Depending on the type of attack, this defence is either part of the protocol, or can be coordinated by users in the network. Further reading here:

https://vitalik.ca/general/2020/11/06/pos2020.html

Details:

https://vitalik.ca/general/2020/11/06/pos2020.html

USDC and DAI are both collateralized and doing fine at the moment and can operate as a decentralized currency and payment rail.

It is never 100% risk free, though. The best way to maintain peg to dollar is just to hold the dollar. Many stablecoin holders are taking on this higher risk as they seek yield in protocols like Aave and dYdX, or to have ready liquidity to deploy this in the crypto investment market.

It is a scam, you send tokens and they send you nothing back in return.

Similar to how PoW distributes rewards: those with the capital to purchase mining power will reap benefits.

This model unfortunately also exists in stock markets and most aspects of a capitalist society. Arguably PoS returns in crypto networks may be slightly more equitable long-term as it is not a permissioned and closed-door system (validator queues cannot discriminate based on class, race, credit score, region, and family for example).

Thanks for the link. The paper mostly only addresses one issue I that mentioned: attempting to distinguish intermediaries from individuals. It does not make any conclusions about how adoption of crypto as a whole will result in 100x more unequal wealth distribution than the regular economy which is what the OP tweets seem to be implying based on this 0.01% statistic.

The paper does point to the fact that holdings are skewed; 400,000 individuals control almost half of the circulating supply, so—like with the stock market—a very small handful of players stand to benefit if the price continues to appreciate significantly. This is particularly a problem for crypto currencies like Bitcoin that have a fixed supply capacity and are primarily used as a store of value. (Disclaimer: I own no BTC and feel it has inherent problems.)

Another study comparing Bitcoin, Ethereum and other coins to real world Gini coefficients finds similar results: that a small number of addresses hold a significant sum of tokens, but that overall wealth distribution in crypto currencies is often in-line with that of real economies.[1] The idea that crypto holdings mirror the wealth inequality of real economies is hardly surprising considering this is where the investors are coming from.

Two more interesting points raised by [1] worth noting:

> Results from both Bitcoin-like and Ethereum-like cryptocurrencies suggest that the wealth distribution is initially poor likely due to only a select few participants controlling the majority of the wealth. But this concentration often dissipates as more participants join the system, as observed in Bitcoin and Ethereum.

> Bitcoin-like coins often have capped supply, i.e., the number of these coins are algorithmically limited to a predefined quantity to provide intrinsic value to the asset. Ethereum, on the other hand, does not impose a strict limit on the supply of Ethers. ... Thus the figures reported in this subsection will likely change significantly over time, unlike Bitcoin-like currencies in which a large proportion of wealth is already distributed.

[1] https://ulir.ul.ie/bitstream/handle/10344/11073/Sai_2021_Cha...

Those arguments can also be made for PoS.

Gini coefficient is often used in traditional markets:

https://vitalik.ca/general/2021/07/29/gini.html

If you have significant fiat capital you can easily purchase mining power in PoW. Similar with purchasing validator power in PoS. The two are equal in that regard. Where they differ is that PoS is more resilient to 51% attacks of this nature than PoW is.

There is no doubt crypto includes wealth inequality as the network exists within our capitalist society. If 10% of the world population were to purchase crypto today, it would mirror the same wealth inequality we see in our fiat economy.

But claims that crypto networks display 100x more wealth inequality is not supported by this statistic, and articles should not be basing their arguments on this stat without understanding the implications.

In PoW you can purchase miners. In PoS you can purchase validators. But PoS is easier than PoW to defend against a 51% attack as the offending validator set can be targeted.

Several issues with using this metric to measure wealth inequality for crypto currencies, especially those with smart contracts like Ethereum.

- A single address might be a contract like WETH, which can hold tens of billions of dollars worth of tokens despite all users in the network having access to it. Similar with centralized exchanges holding many tokens. Addresses are not users.

- This metric often confuses “inequality of interest” with “inequality of wealth.” A user holding $10,000 of ETH and another user holding $100 of ETH may be in similar fiat-wealth brackets, but one is more interested & invested in crypto than the other.

- It is very easy to spin up a new wallet as it’s effectively just a random unique number. A single user might have 10-20 wallets with almost-zero tokens leftover, and all of their assets concentrated on one or two accounts, which further skews this stat.

- A number of tokens in the network are inaccessible due to being locked in a contract or sent to a burn address. The standard ETH burn address has $250M worth of tokens.

There is a lot of crypto disparity and inequality but this stat at face value is fairly meaningless.