I think the debate is more difficult than that.
It is true that PoW, if specialized hardware is out, allows for such economies of scale, that centralization is unavoidable. This is what happened to bitcoin, what happened to scrypt coins which lost their reason-d'être for it. For the moment, there are still PoW schemes which allow spread-out mining, but the question is whether that's due to the fact that these coins have low enough stakes that it isn't worth *yet* to develop ASICs for it, or whether they found the magic solution.
In other words, PoW avoids too much centralisation, as long as general purpose computing can compete in the mining race. From the moment that you cannot do PoW on your PC any more, it is essentially over. The question is whether there are PoW algorithms that will remain complex enough, even in the face of enormous potential gains, to resist specific hardware development. I might think that an algorithm that is *regularly forked* might be a solution. You are not going to invest into billions of hardware if 6 months later, the algorithm is forked into something that renders your hardware useless. Also, if general purpose computing is the best solution, that might at best stimulate the development of better general purpose computing hardware, instead of totally useless hardware EXCEPT for mining a specific coin.
So maybe a morphing, forking, complicated PoW algorithm is the best protection against PoW centralisation.
It is true that PoW, if specialized hardware is out, allows for such economies of scale, that centralization is unavoidable. This is what happened to bitcoin, what happened to scrypt coins which lost their reason-d'être for it. For the moment, there are still PoW schemes which allow spread-out mining, but the question is whether that's due to the fact that these coins have low enough stakes that it isn't worth *yet* to develop ASICs for it, or whether they found the magic solution.
In other words, PoW avoids too much centralisation, as long as general purpose computing can compete in the mining race. From the moment that you cannot do PoW on your PC any more, it is essentially over. The question is whether there are PoW algorithms that will remain complex enough, even in the face of enormous potential gains, to resist specific hardware development. I might think that an algorithm that is *regularly forked* might be a solution. You are not going to invest into billions of hardware if 6 months later, the algorithm is forked into something that renders your hardware useless. Also, if general purpose computing is the best solution, that might at best stimulate the development of better general purpose computing hardware, instead of totally useless hardware EXCEPT for mining a specific coin.
So maybe a morphing, forking, complicated PoW algorithm is the best protection against PoW centralisation.
The moment any PoW algo becomes profitable, don't expect the ASICS to be that far behind.
But PoS has also its integrated centralisation, because the compound interest formula diverges, which means that in a toy world where N parties have different stakes, and you let evolve a PoS system (with "interest") in such a world, then the initial top stake holder will ultimately obtain all coins. One can even estimate the time frame over which this divergence takes place. Once the top stake holder has 50%, or 66%, or 95% of all stakes, he is total master of the network (which, at that point, becomes most probably worthless).
The PoS system has the inherent instability of any "capitalist" caricature, where the rich get richer, because your possessions give you a a proportional fraction of the gains, which increase your possessions, which entitle you to an even larger fraction of the gains, until you reach 100% of all gains.
There is essentially no solution to the centralisation problem, apart from 'changing the rules' regularly and in an unforeseeable way, which is exactly what "immutability" tries to avoid. In the real world, that's also what happens, and avoids all richness to concentrate in the hands of an oligarchy: revolutions, political overhaul, unforeseen crises, war, ...
Without those perturbations, there would just be a few rich families possessing the earth, and all the rest of us would be their slaves.
The PoS system has the inherent instability of any "capitalist" caricature, where the rich get richer, because your possessions give you a a proportional fraction of the gains, which increase your possessions, which entitle you to an even larger fraction of the gains, until you reach 100% of all gains.
There is essentially no solution to the centralisation problem, apart from 'changing the rules' regularly and in an unforeseeable way, which is exactly what "immutability" tries to avoid. In the real world, that's also what happens, and avoids all richness to concentrate in the hands of an oligarchy: revolutions, political overhaul, unforeseen crises, war, ...
Without those perturbations, there would just be a few rich families possessing the earth, and all the rest of us would be their slaves.
Actually you bring up a point the only real problem with Proof of Stake is Interest (Inflation) .
We all try and treat PoS like it is a saving account, that is the mistake it is not a saving account.
Banks could do saving accounts because they were charging higher interest rates for loans and paying out a pittance to savers.
Proof of Stake Coins when we paying out even 1% interest are pulling that payment directly from our marketcaps and decreasing our price per coin.
That is why at ZEIT, we are changing the rules, starting around April of 2017, we move to an Ultra Low interest rate with only .0005% yearly .
PoS will be used to keep the network running and secure, and not as a savings account that kills the marketcap.
