[1053r]

Your linked argument is poorly formed. It's true that any system which periodically emits value will cause people to work towards achieving that value. However, it's not true that the work in question will necessarily be wasted in an arms race.

Specifically, a (well constructed) Proof of Stake system will cause people to work to get a piece of the value by having them purchase the coin used for staking. This will cause the value of the coin on the open market to rise, which will increase the equilibrium market cap of the coin in relation to the world.

Because "money is a veil" [1], this won't create or destroy any actual goods or services. It will just transfer value from some persons to other persons. Therefore, Proof of Stake is more efficient than Proof of Work, because it moves cryptocurrency from negative-sum (electricity wasted) to something that's approximately zero-sum.

Another way of saying this is that you can't PRODUCE value by creating any currency with zero intrinsic value. However, you can WASTE value in this activity, and Bitcoin, as currently constructed (along with all possible Proof of Work systems) is wasteful. Proof of Stake wastes less value than Proof of Work.

1 - https://en.wikipedia.org/wiki/Veil_of_money

[deevolution]

How does proof of stake prevent double spending if there are no miners to validate blocks? I must be missing something here...

[AgentME]

Stakers take act like miners, but instead of staking computation time through proof-of-work, they stake an amount of cryptocurrency which gets burned if they ever double-vote (and maybe if they vote for the losing chain, etc, depending on the scheme).

It's not very obvious how exactly a proof-of-stake scheme should work though. Many past attempts have been pretty flawed. I'm excited to watch Ethereum's progress in this area.

[warbiscuit]

Not that I'm totally sold on it, or grok it fully, but from my rough understanding the very highest level (for Ethereum's Casper)...

The idea is that a double-spend attempt by a cartel of validators could be included in a new block as cryptographic proof to used take away their stake entirely ("slashing" it). Where a BTC miner would merely lose the cost of an attempted double spend block, and could keep mining more bad blocks; removing their stake completely is like burning down their rig.

In order to prevent that punishment, they'd have to control >2/3 of the staked coins on the network. Which means as long as total amount staked grows in value proportional to the network, this will be incredibly expensive. By adding rewards for staking, this further incentives long-term holders to stake part of their holdings, to secure the network.