Post
Topic
Board Bitcoin Discussion
Re: Annual 10% bitcoin dividends if mining were Proof-of-Stake
by
SlipperySlope
on 24/04/2014, 06:53:42 UTC
... with a PoS network we will exploit our natural resources faster than with a PoW network.

Why? I foresee that Proof-of-Work power requirements will continue at the 10x trend we both model. How could Proof-of-Stake exceed that?

It is difficult to explain, and that's why I agree with you that it appears that PoW is more wasteful (and that this could be used as a political weapon).  This is a half-baked explanation, but perhaps the essence of what I'm trying to communicate will still come across:

For me it comes down to the simple fact that PoS rewards those who already hold the most wealth--they no longer even need to work for it.  I think this creates more opportunities for rent-seeking and less impetus for innovation.  I believe an economy that favours rent-seeking over work + innovation leads to the misallocation of our natural resources.

In fact, I am a landlord and collect rents. But of course you mean economic rent-seeking of the sort that patent trolls employ to bedevil innovation. I believe that capital seeks its wisest custodian - optimal for the overall economy if opportunities for rent-seeking are minimized or mitigated.

How can rent-seeking behavior be prevented by Proof-Of-Stake? The critical aspect is the Bitcoin mining reward and its schedule for halving. When the mining reward is tiny compared to the transaction fees awarded for solving a block then I propose that rent-seeking behavior will be diminished as annual dividends drop to the point where the risk of exposing the stake to the network is not worth the gain.

Because Proof-of-Stake is many orders of magnitude more efficient than Proof-of-Work, I expect that Proof-of-Stake holders would accept much lower transaction fees to process a block than would Proof-of-Work miners who must pay for equipment, power and their own time.

In the meantime, I claim without proof, that Proof-of-Stake rent-seeking behavior is less harmful than the manifestly wasteful Proof-of-Work alternative.