Topic: Proof of Stake - am I missing anything here? (Read 241 times)

I'm seeing quite a rise in the number of various altcoins that adopt PoS model. And still I have little understanding as to what altcoins based on such a model could potentially achieve. And PoS altcoin founders generally don't like "why?" questions at all (as in: why do you think your idea will work?).

One might say that in simple terms, it's a crypto-equivalent of shares/stakes. However, this doesn't address the harder question - why it is better than "vanilla" shareholding? Surely, there are nice aspects in it for an ICO performer, such as considerably lowered (up to non-existence) need for any kind of legal conformance, and much lower costs of the whole operation, compared to IPO. And there's a number of problematic aspects as well, such as extremely volatile market, which can skew the results of ICO quite severely and in both ways.
However, I find it really tough to find benefits in PoS-model altcoins for a "common joe", an ICO participant. Compared to "vanilla" shareholding, it exists in a legal grey zone (and quite close to legal void). It gives less power to a stakeholder, as any power distribution abnormalities and/or outright abuses can't be dealt with legally. One might say "but hey, it can be independent from any government" - but that's hardly a benefit in itself, as since times immemorial it didn't require any government for a person to trust his valuables to another person under some terms that couldn't necessarily be enforced.

And if you look at PoS altcoins without any rosy-tinted glasses, there are a number of things such altcoins can achieve, but none of them are any good. For example, any PoS altcoin in itself is a natural pyramid scheme: make your own altcoin then try to find "believers" to bring it real funds while keeping their interest piqued by PoS's "the more you invest, the more profit & power you will have" line, while in reality all the net worth increase will be due to more people joining the scheme. Of course I'm not saying that all PoS model altcoins do behave that way, but the model itself is readily compatible with all kinds of "lets get rich quick by pulling more people in" schemes.

PoW, on the other hand, is built around deeds (as in: for a bitcoin, a "deed" is a transaction), and if people find deeds performed by participants valuable enough, they will pay for them to be performed. This creates a simple system that closely mirrors real-world basic principles of economics: do useful things and be paid in valuables. PoS tries to be a "invest your valuables into a business", but in my current opinion, it fails to provide any meaningful benefits over traditional investment models, while at the same time currently has numerous glaring problems.