Smooth, I trust your opinion more than the DPOStards, so I'll ask you something. I have heard the rhetoric before but I wanna here this from you as a developer of POW coins.
What are the pros and cons of DPOS if compared to POW? They say it's more efficient and the transaction throughput is potentially way way more than what any POW coin can ever make.
Please comment. Thanks.
Yes, on-chain scalability is much easier because the block times are regular (every three seconds in the case of Steem) so you don't have the orphan issue that you have with POW coins if you try to make the block times very short. Similarly, there is an expectation that all of the delegates/witnesses are running in data centers. So there really is no issue with massive transaction rates and even things like putting votes on a blockchain (to a point). Steem currently has 65K blocks and with 200 blocks per 10 minutes that's the equivalent of 13 MB bitcoin blocks. I have little doubt the system could handle that easily, and even quite a bit more (witnesses can vote to increase the block size). Some problems do arise though, such as the archival blockchain becoming massively large and hard to manage.
(As an aside I don't know that I would agree it is more than "any POW coin can ever make". For example, systems like Bitcoin-ng or variants of it could probably deliver similar throughput with a slightly different set of tradeoffs.)
This results in a very large inherent degree of physical centralization since essentially the whole coin is running in data centers (I don't know the numbers but I would not be surprised if 80% or more of the witness nodes were at just a few hosting/cloud companies. If someone wants to try to shut down the coin and goes after the data centers, things get messy. Yes people can run nodes at home or in crappy data centers but throughput and reliability will take a big hit.
Also, stake is pretty centralized and all voting systems are further centralizing (51% of votes gives you 100% control, and even, for example, 49% is usually 100% control in practice). So whales run the coin to a large degree, more so than PoW coins that are kind of an angry mob, for better or worse. At present steemit could exercise total or near total control over all witness slots by voting (though the company and most of their devs voluntarily don't vote).
I don't think any PoS systems, DPoS included, are all that good at distributing new coins. It tends to reduce to a form of interest (liquidity-damaging) or stock split (meaningless), or worse, redistribution toward the richest (sort of anti-distribution). Steem might be a bit different, at least for a while, because it isn't trying primarily to be a monetary system but a communications platform with some monetary features. There is incentive for the whales to (sort of altruistically) distribute coins as platform rewards because it helps grow the user base and theoretically the coin value. If the growth stops (for an extended period) then there might be more problems. The market might foresee these problems and resist a higher valuation even with more users. It is hard to say (we've never seen a DPoS coin grow and retain very high market value).
