Post
Topic
Board Development & Technical Discussion
Merits 4 from 3 users
Re: [Megathread] The long-known PoW vs. PoS debate
by
pooya87
on 28/02/2022, 04:06:48 UTC
⭐ Merited by hosseinimr93 (2) ,hugeblack (1) ,d5000 (1)
Quote
they'd also be as correct as one saying that it's less centralized, because it has a better wealth distribution (no ICOs etc.).
It should be clarified that there is a difference between "wealth distribution" and not having an "ICO, premine, etc.".
Having an ICO means initially there were coins that were created out of thin air by the creator and sold to people so that the creator can make money for something that doesn't yet exist. That is a big centralization sign.
On the other hand, wealth distribution means how the circulating supply is distributed among adopters. I'd argue that it has no effect on decentralization. Simply because you can't affect the network with whatever amount of bitcoin you have (bitcoin is PoW after all). Which brings us to the fundamental flaw of PoS.

Quote
Centralization is the situation where few people (can) have a great affectation to the final outcome of our economy.
Why "economy"? It is limiting the definition. I'd say the network as a whole not just the economy. For example the "economy" was centralized back in 2013 when there was one major bitcoin exchange (MtGox) controlling more than 85% of the total trading volume and it was manipulating the market. Yet bitcoin was still decentralized.

P.S. Here is a realistic risk of PoS: a lot of people have proven to see cryptocurrency as a trading tool and they will deposit their coins on a centralized exchange. All of a sudden we have one entity with a huge amount of coins aka stake that can control the PoS too.