Re: "Failure to Understand Bitcoin Could Cost Investors Billions" (Bitcoin's flaws)
I really appreciate challenges of this quality. Thank you.
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A fundamental tenet of investing is buy low, sell high. So if we view these coins as investments, we would expect the larger holders to cash out on price rises, and buy back in on dips. And generally to lighten holdings as price trends higher. Because the wealthy could get trapped in an illiquid investment if they end up owning most of it at a very high valuation.
Also if we view these coins as cash, we would expect the wealthy would not hold most of their wealth in cash.
However, if we view a coin as the money system of society and we view control over the coin akin to control of a central bank, then we can expect the wealthy to obtain the majority of the shares of the central bank. As far as I know, this is in fact what they did in the Bank of England and the creation of the U.S. Federal Reserve.
The important thing here is the stakeholders perception. Empirical observation shows that stakeholders are viewing their stake as an investment, not as a stake of the future money system. Also if we view these coins as cash, we would expect the wealthy would not hold most of their wealth in cash.
However, if we view a coin as the money system of society and we view control over the coin akin to control of a central bank, then we can expect the wealthy to obtain the majority of the shares of the central bank. As far as I know, this is in fact what they did in the Bank of England and the creation of the U.S. Federal Reserve.
During the ascension of the coin, they don't make theirs decisions as if they had a stake in the money system of the society, they make their decision as if they had a normal investment. So they sell when the price increase. And by the time a cryptocoin will become the money system of society, the bigger stakeholders will be vastly diluted by their own profit taking and risk managing.
Central banking was not instaured because the wealthy has most of the money supply but because of political coercition. The wealthy were not wealthy enough to control the money supply by themselves, so they use coercition to obtain that control.
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If there was some profit to be made from processing blocks in PoS, then there would be a profit motive for obtaining more shares in the currency. Otherwise, the interest in monopolizing PoS shares will only come when the currency is a dominant political and economic factor in the real economy. At that point, the wealthy buy up say 50 - 80% of the shares, then the remaining shares become the cash in the economy and the wealthy hold their shares as if they are shares in a central bank. The point is that nobody will sell off the currency at this point because it is the dominant one. At that point, you are right back to a fiat system. Buying up that 50 - 80% share would likely drive the price higher, thus further cementing the dominant role in the economy and the lust to hold it. If they do this as a transfer of dollars to the coin, i.e. hyperinflation of the dollar, then there is no dollar to return to any more.
Neither NXT or Bitshare will be profitable for miners, see this thread for NXT https://bitcointalk.org/index.php?topic=458036.0. The ROI for NXT "mining" will be something like 0,05% per year, no incentive to hoard here. I don't understand the technical detail but I know Bitshares will implement also something that will make mining unprofitable.By the time the currency become the dominant one, the wealthy will not be able to acquire a significant stake in it. Again, even the wealthiest aren't wealthy enough to have a significant stake in fiat.
How can PoS attain similar marketing and adoption?
For instance the distribution of PTS is done by POW mining, and PTS give a stake in Bitshares, which is PoS. So with Bitshares you have a PoS coin where coin distribution is done by mining. The best of both world.Also when Bitcoin was mineable with a CPU, only a tiny fraction of the population was aware of what's going on. I think it's quite possible that today more people have the possibility to have a stake in a PoS coin via an IPO, than people had the possibility to mine Bitcoin in 2009/2010.
Recently roughly 2m$ were burnt for the distribution of XCP. I think a lot less than 2 millions $ were spend in BTC mining materiel in 2009. Furthermore we can except that several dozen m$ will be dedicated for the acquistion of Etherium coins.
Today if more ressources are devoted to coins acquisition than before, it's because there is more awareness among the crowd. More ressources devoted to coin acquisition mean today's coin (included PoS coins) start with a level of marketing/adoption which is way higher that the first PoW coins had.