The problem with a pure implementation of Proof of Stake - all technical difficulties aside, is it's always going to be a monopoly in favor of those that already have stakes - which is untenable for a currency which needs to gain an audience and circulation.
I agree but I think that is a problem with a solution. As scammy as Auroracoin is it has the right idea. Could you imagine a government using proof-of-stake crypto to implement a basic income scheme? Every month registered citizens automatically receive a certain amount of crypto income which they can automatically save by generating blocks or spend. That would solve the unequal stake distribution that Peercoin and its clones suffer from.
There would certainly be identity fraud, but the government deals with pension/Social Security fraud every day and is best equipped to handle it. Whether or not a major country would actually try this initiative is another question. But I think there will be at least one country with a weak currency that tries it out.
The other issue, which jgarzik mentioned earlier, that "in PoS there is nothing at stake" is also a technical problem that I think Ethereum will be trying to solve.
Actually even if you had a way to distribute a Pure Proof of Stake implementation fairly and uniformly - it would still be a poor medium of exchange - this is because even if the currency was inflationary it would still only be inflationary for the holders, meaning that spending would be arbitrarily discouraged. (That is to say the person that did not spend but instead increased his Proof of Stake reserves would gain more and more advantage just with passing time, in a way currency already works this way (compare those for whom most of their income is consumed by day to day life, to those that have surplus to invest and earn a return on) - only it would be exacerbated by the Proof of Stake implementation (You wouldn't even need to invest to earn returns!).
It is possible to conceive a centralized inflationary PoS scheme (such as the government acquiring all newly created funds), but this would rather terminate the point of PoS and decentralized currency - although it would make it into a functional medium of exchange. I suspect terms similar to these are the only one's under which a government would actually back a cryptocurrency - since otherwise it would mean forfeiting centralized control of the money supply.
As to Jgarzik's comment, I'm not sure what the context is, but supposedly you are able to double or multi-sign the same numbered Block, this could be penalized for by doing something like a reverse Ghost weighting - i.e. reducing signature weight for outputs present in more than 1 uncle of the last block (but that might be too much added overhead). There are probably a lot of other issues though - I'm not that well technically informed.
edit: just to be clear, in the above I'm not talking about the distribution but about the actual equilibrium state that Pure PoS would gravitate to.
