Keep the Change! — Replay protection is a Red Herring

Much about the current Bitcoin splitting debate has revolved around the notion of a hard fork splitting of the network being dangerous. So dangerous, in fact, that core developers have constantly stuck to the argument that the community should trust in their (exclusive) council in order to ensure that we don’t engage in anything that may be unsafe for ourselves. Trust them, they know what is good for us. When libertarians and skeptics around the world hear that they are immediately put on alert.

Most recently an exchange between ex-Bitcoin lead maintainer Gavin Andresen with Core contributor Matt Corallo was especially interesting.  Besides the run-of-the-mill talking past each other where Matt seems to ignore points that Gavin clearly addressed (regarding n**2 sighash issues, solved by capping txn sizes to 1mb) the core theme (pun intended) repeated again by Matt was that Hard Forks have no community support (by his own judgement) which is clearly shown by the fact that nobody seems to be giving much attention to the HF proposals in his (exclusive core dev curated) proposal list.  Not much surprise here, the standard echo-chamber reality distortion field stuff.  What was interesting, was that he once again mentioned the need, nay, the necessity of ‘replay protection’ in ANY hard fork proposal.  This is very important point in the core dev platform, as it serves a dual purpose.  One which on the surface is ostensibly for the public good, the other may be much more shadowy.  Let’s examine what replay protection is, and why we really don’t need it.

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Lightning network: will it save Bitcoin? Or break it?

Lightning network has been heralded as the way to scale Bitcoin into the future, but as it is starting to become apparent that two very separate camps with differing opinions on how to scale Bitcoin are starting to draw lines in the sand, it’s worth taking a pragmatic look at this technology, seeing as it seems to be shaping up that once adopted, it will be very difficult to back out¹

First off, I want to say that Lightning as a concept is pretty interesting.  I think that it will have many uses in the world of Bitcoin.  Yes, I have read the white paper (both long and short version) and I believe I have pretty good understanding of how it works.  A disclaimer, as most of the development is happening behind closed doors via BifFury, it’s hard to comment on any of the new yet unreleased progress, such as developments on the routing algorithm.

Let’s examine the pros and cons of the Lightning overlay network.

  1. Unlimited txn/s
  2. Secure from double spends
  3. Requires Bitcoin to use

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Ethereum: A Hard Fork Lesson for Bitcoin

imgresEthereum made crypto-history this week by being the first PoW blockchain to execute a hard fork. They claimed it was done after getting unanimous consensus from the community through stake voting which many have criticised as being nothing more than a farce, as less that a total of 13% of the coin population bothered to turn up to vote, and some sources say it was even possibly less than 2%. Nevertheless, the hard fork was devised and coded, hastily tested, and released, and when the fateful day arrived when it was pre-programmed to activate, July 21st 2016, the network indeed split into two. Quietly, smoothly, without much fanfare.

A week before a group of developers and supporters who opposed the hard fork on ethical principles formed a movement called Ethereum Classic, and pledged to reject the new fork which would see the seizure and confiscation of the ETH that the DAO attacker had acquired during his raid. This movement also saw the defection of about 5% of the mining power in the ethereum network.

What happened after the fork block made history. Contrary to what the ETH developers said, the fork did not remerge and the minority chain persisted. At first the block rate was a fraction of the majority chain. But now after 2 days the block rate has stabilized and the minor chain is mining blocks at about the same rate as before the fork. In addition, the difficulty of the mining is only 1% of the majority chain, which adds an economic incentive for miners to mine on the minor chain in order to make more rewards. This second chain represents the split-fork scenario that many Bitcoin core devs have been warning the community that would cause chaos and destroy both systems. Only, it didn’t. At least not yet.

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The Mining Centralization Myth – Part 1

hqdefaultIn this 2-part article, I have decided to address some of the very commonly spread myths in Bitcoin space, namely that of mining centralization, and its effects on the BTC price valuation.  At the end of reading this I hope that you will have a better understanding of the complicated topic of decentralization in terms of economic factors, and also how everything is perfectly reflected in the BTC price.  Also, I hope that you would have a new found appreciation that BTC price is going to continue to fluctuate wildly and even may go to zero, under certain certain scenarios.

But first, to the often repeated, and universally unsubstantiated claim:  That Bitcoin is suffering from miner centralization.  First off, I want to stave off all the thoughts that the proponents of this opinion are thinking now: “You must not have heard of this thing called the Great Firewall of China!”, “You must not understand what the propagation delays are and its affect on orphan rate!”, “You must not know about the mining relay network!”, or my favourite, “Maybe you haven’t heard, but they have this corrupt oppressive government over in China!”.   Rest assured, I know, I have heard all the arguments, and I have well connected business associates in China.

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The Future of Bitcoin Governance is Unlimited*

 

Inverted-Gravity-Vlad-Tenu-02-795x524

Nature is full of self-organizing, self-optimizing structures

There has been a lot of chatter recently on coat-tails of Bitcoin core’s 2016 Roadmap which was disappointing for a lot of people in the industry who were expecting to see a more immediate capacity increase via a non-contentious hard fork.  This has brought the debate back to the issue of Bitcoin governance and our current lack of consensus on how Bitcoin should be governed.  I had previously written a proposal about creating a meta-protocol above the technical protocols of Bitcoin itself, which would be a basis for competing ideas, goals and principles to be proposed and agreed upon, much in the same way the BIP is a process by which competing enhancements or features are proposed for the protocol itself.  In the prevailing months, I have come to realize that a free market solution has manifested which makes such a rule system unnecessary: one of Emergent Consensus. (a sort of self-organizing property)

This is a completely new idea, and not one that we are accustomed to understanding, given that all organizations and political systems in present times rely on a notion of democracy where the general public (lacking sufficient time, knowledge, or rigor) delegate their rights to a representative, whom they vote into power, who in turn should make decisions on their behalf for a designated period of time.  They do this for no visible reward, and the cost of failing at their task is losing the vote the next time around.  In such a system, we are basically basing the entire security of the system on the premise that we will be able to find enough of these altruistic ‘saints’ who will consistently put the good of the many above their own desires.  Of course, as we all know, supply of these saintly people are in hard supply, and thus corruption is born, inherent to the system itself.  (Remember politicians are not supposed to be rewarded proportionally for the services that they perform)  Bribing politicians is how the free market reacts to this inequality.  This talks to the root of the problem with Proof-of-Stake systems, which serve to enrich the rich (those with more stake) proportionately more than the poor.  This is also the base of consensus systems which rely on weak subjectivity* instead of objective consensus**, all of which are still theoretical and have not been shown to work in practice at scale.  Our current democratic system of politicians and government is a weak subjectivity system.   We must trust that there is a critical majority of politicians that are not corrupt, as well as trusting one specific honest politician to tell us what is in our best interest, in order for the system to work for us.  I will leave you to ponder on whether or not it is an inherently stable system in the long run.

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Block size: We have consensus! Or do we?

It seems the row between the Bitcoin conservatives and the Bitcoin progressives are widening much as you would expect Liberals to disagree with Conservatives, Democrats against Republicans.

Teenagers hands playing tug-of-war with used rope

I am a pragmatist first and foremost.  The only thing that I am vehemently against is fanatics and zealots.  Unfortunately you will find them in either camp in spades.  I suppose that is the curse of politics.  It is the science of influence and manipulation after all (if I may be excused in dirtying the word ‘science’ in that manner for but one illustrative instance).

I will be upfront.  I really didn’t like XT.  I thought Gavin was a bit cheeky in the way he just left the table and tried to convince many exchanges and wallets providers to support Mike Hearn’s upstart rebellious XT fork of Bitcoin.  It seemed rash, unwarranted, and generally an attempt to ‘rock the boat’.

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Dr. Bitlove* (or how I learned to stop worrying and love XT)

Ok.
So with such a contentious title which is sure to be an attention grabber aside, let me explain:

I don’t *love* XT, I love what it represents. Not specifically small blocks vs large blocks, but a counter voice in a collective democracy which is the Bitcoin community. I believe that we as a community need to have contrary views and healthy debates which voice all sides of an issue, so that we can remain impartial and objective, and resist becoming an echo chamber of unified thought, which is just another form of centralization.

In my previous writings I warned against moving into a dictatorship like model, where we blindly follow leaders.  What we must also be wary of is the propensity to naturally devolve into such a situation when all counter viewpoints are forced from the public discourse.

That unfortunately seems to be the case with Mike Hearn leaving XT, along with a lot of anti-XT vibes I felt at Scaling Bitcoin.  I think that I feel as many do, that the consensus was that a small bump in block size is not contentious, and such a hard fork should be pursued in parallel with other non-block size scaling initiatives (such as SegWit), if for nothing else but to collect data on how a non-contentious hard fork would propagate through the network, and to prove that the network has the resiliency to execute such a change if and when it is needed.

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Centralization: how everyone is trying to ‘solve’ a very old, very hard problem

Several weeks ago, I mentioned that I would explain why Bitcoin is the only commodity currency that can exist.  I am not doing this topic enough justice, but I will touch briefly on this before moving on.  Succinctly, the reason is that commodity currency is always spontaneously created in a locality in order to facilitate indirect exchange in the immediate community that it serves.  This has been shown in the past, with gold, silver, and to a lesser extent, sea shells, jade, glass beads developing as the commodity used for exchanges.  The extent of the geographical usage of a certain type of commodity money, was based on how far its reach extended while still retaining its characteristics necessary to perform as money.  For instance, seashells didn’t have too large of a locality, because pretty soon as the economies that it served got larger and larger, people found out that seashells were actually not scarce enough and hyper-inflation destroyed the value of the commodity as money.  Another issue that physical commodity currencies faced was that due to their physical form, their circulation was very much limited to the extent that they could be passed from person to person. This meant that societies isolated from each other (economically) could individually develop their own preferred commodity to be used as money.  This is how it became the case that some societies settled on a silver standard while others settled on gold.  Both metals possessed all the necessary characteristics required of money, and the only reason that more than one standard evolved was due to the fact that the societies were isolated from each other, and thus had no need for inter-commercial connections.  This fact also illustrates how economies will inevitably settle on one standard, barring physical restrictions.  Bimetallism, where both gold and silver were simultaneously used as the official unit of money only developed, (without the help of any government) due to the limitations in the ease in which gold could be divided into smaller portions, and as such silver facilitated small scale commerce while gold handled the large value transactions.

Fast forward to the age of digital currencies.  The locality of Bitcoin is the internet.  There is no hidden stash of bitcoins to be suddenly unearthed somewhere, so we can rule out a sudden unexpected jump in the supply of the commodity.  This means that, for the first time, we have a commodity which has a very stable well-defined supply curve.  From this it follows, that Bitcoin should at the least have the potential value stability as gold had in the past. Additionally, since the locality we are concerned with is the internet, whose reach is global, Bitcoin will suffer the issue of having competition from isolated societies that can compete for its usage, the way gold had to contend with respect to silver for a long time.  Thus, as Bitcoin already has a very solid economy and usage on the internet, along with the fact that the divisibility of Bitcoin is not an issue given its digital nature (if we ever needed sub-Satoshi value transfers, side-chains would be able to facilitate this), this is why I believe that Bitcoin is the only commodity money that the internet will ever need.

Centralization

A hot topic in crypto currencies circles currently is the topic of centralization.  This topic is hotly debated in both Bitcoin camps and other non-Proof of Work projects.  Collectively I will categorize them as ‘PoS’ systems standing for ‘Proof of Stake’.  The reason this topic is so hotly debated is that any discussion that involves it will inevitably gravitate towards politics, democracy, and the preservation of individual rights and freedoms, and we all remember from our childhood family dinners that when politics are brought up at the table an argument was sure to follow.

Essentially what blockchain technology is, is the ability of a decentralized network system to be able to store a database of information (a ledger) in a synchronized way without any inconsistencies arising from the peer-to-peer nature of the network. Both PoS and PoW systems address the issue of consensus in a P2P network, which is to say, they govern how to ensure the integrity of the data, with peers freely joining and leaving the network.

I will try to address the criticisms for and against PoS and PoW, but first, some detailed explanations of each are in order.

Proof of Stake

Decentralized consensus systems rely on incentive systems to ensure honest actors prevail over bad actors.  Proof-of-stake essentially attempts to solve the incentive problem by requiring actors to ‘stake’ or lock up some of their in-system funds in order to participate in a lottery in which the winner is selected to ‘win’ all the fees from the transactions that were confirmed in the last block or update.  Some variations on this include systems that distribute the winnings in proportion to the amounts that were staked to all participants in the lottery, which essentially amounts to a deposit banking system, where as unneeded cash reserves are locked for a time, which serve to produce an ‘interest’ rate paid to the depositor.  These deposits are not on-demand (they are locked for a time duration) and thus constitute a full-reserve banking system model.  Without the requirement of work, PoS systems promise to be able to confirm blocks at a much lower external cost and faster than PoW systems as there would be no electricity required over the normal amount needed for just running the validating node itself.

Proof of Work

This is the system which Bitcoin uses, and as I described in a previous post, the work involved in creating the coins allows it to mimic a commodity money economy precisely.  In fact, if gold or oil reserves were completely known a-priori, (no sudden discoveries of new reserves somewhere, all reserves on the planet identified) then the evolution of gold from shiny metal to being the world reserve money would have followed the same path as Bitcoin, albeit on a slower time scale given that technologies to mine gold more efficiently took a lot longer to develop and required a lot more capital resources to develop.  This work expended in order to maintain and secure the network consensus, is an external cost to the system (in kW/h in this case) and the reward is paid for in internal network coins (bitcoins).  Unlike PoS, the amount of weight or influence you posses as a securer of the consensus system is not a function of the wealth that you have in the system (represented by your stake) but instead by the amount of external work that you can put into it at any given time (in kW/h and hashes/s). This cost to maintain the network being external, you will see, is the key to why PoW systems are in the long run more likely to succeed in creating a stable money system.  But for now, let’s address the individual pros and cons of each system.

The Problems with PoS

PoS coins are equity, not money.

I have found that a very accurate analogy for PoS systems is that of shareholders equity of a company.  The bigger share you have, the more voting rights or power you have to determine the companies future.  Your voting rights are proportional to your share ownership and dividends are paid out to shareholders.  One important fact that you will note is that while equities definitively have value, that value is tied to the health of the company, and certainly a share has little or no exchange-value/money value, because it isn’t used as a common means of facilitating commerce.  Indeed even if we could trade equity as freely as we can trade bitcoins or cash, I do not believe that it would be usable as a money-substitute, for reasons similar to the one against widespread credit money, simply the lack of people willing to accept it due to counter-party risk, would prevent it from getting widespread adoption.  Now there are some key takeaways here in the comparison of PoS systems to equity in a corporation.  Firstly, corporations are highly centralized entities;  how many of you who have worked at a large corporation and can say that internal politics were not an issue at work?  Fact is, when people are incentivized to expand their own shares in the system then there is a lot of infighting and manipulation of the rules of the system to one’s advantage.  The game inevitably (in a poorly run company) becomes one where the upper management is tasked with keeping the lower ranks of employees complacent and happy while they continue to use the system to enlarge and ingratiate themselves and their friends. If you think this sounds familiar, then you are right my friends, this is exactly how politics of government work. (yes, even in democracies!)  PoS systems mimic this exact system, because the rewards given to those who maintain the system are proportional to the wealth and power the parties hold in the system itself.  It’s the rich getting richer problem that those socialists always rant on about.  Pretty soon, given lack of competition, one ruling party will become incumbent and provide most of the security in the system, and you would have a mirror of our centralized political system in the real world.  This can be the only logical conclusion to any PoS based consensus system.

Advocates of PoS systems argue that unlike government, who’s rules are hard to change, with crypto currencies, they can reserve the right to tweak the system parameters as to avoid the centralization problems we see in the real political world.  I am not convinced that such a solution has ever been found.  Think about it, we as humans have been iterating over many different political systems in the last 6000 years of recorded history.  We have moved from centralized systems of monarchy, to federated systems of feudalism, to socialism, to capitalism, and to date we still have not found a completely ‘fair’ solution which is incorruptible.  Do you believe that a couple of computer science and math academics will suddenly be able to solve this problem which has plagued humanity since the emergence of civilization?  Perhaps, but I’m not going to bet the farm on it.

Staking incentives are economically biased

Being a proponent of free market economies, another issue that I see with PoS systems is that the staking process is inevitably linked to the fiscal health of the system.  What this means is that how much people will stake to help secure the network is akin to the decision of how much value would you save in the bank vs invest vs spend.  As we have seen, staking is essentially locking up an amount of value for a certain period of time, such that you can earn a return or interest on that amount.  This boils down to a lenders vs savers game.  As staking can be seen as a risk-free rate of return that the network gives you, as the demand for cash in the micro-economy rises (interest rates and investment returns rise), then you will see less people staking and the security of the network is adversely affected.  Also, as there is a greater incentive to stake with the more stake you own, you will see a gradual gravitation of large holders of the coin to simply stake and ‘collect rent’ from the network.  In the real world, as money becomes cheap, interest rates fall (it becomes increasingly easy to obtain capital from investors) and as such the deposit rates at savings institutions fall in step, thus reducing the incentive to park your money in a bank.  This creates a balancing effect between the supply and demand for money because as more people demand money, the supply of it becomes more available.  On the contrary, in a PoS system, where the ‘interest’ on deposits are paid for by fees of transactions, the more transactions that are processed, the more interest would be paid to stakers.  Thus, quite backwardly, the more money which is used up in fees and thus increasing the demand for money, then the less likely it would be made available by the people who control large sums of it, because they can increasingly make more money by just locking in with the richer risk-free rate of return obtained by staking.  This creates an economic bias to hoarding over spending.  The rich will in general hoard more while the rest will be forced to spend more (in an attempt to become rich).  As a student of free market Austrian economics, I do not believe putting any bias on the side of spending or hoarding is a good thing.

The incumbent whale problem

Another problem that PoS suffers heavily from is what I call the incumbent whale problem.  What this means is that a sleeping whale, with a lot of stake in the system (be it that they were an original founder, or an initial adopter who made a lot of gains in the system) can then immediately become an influential player in the stability of the system.  Imagine if a founder of a PoS coin (whether it be an individual or some foundation) with a significant amount of coins comes into the system and becomes a large part of the validating power due to the large stake that they are willing to devote to the staking process.  This means that at anytime, a large player can jump into the staking game, and adversely reduce the profit of all the little players who were in the stake pool.  This makes the process of staking your coins a very volatile and risky one, and this would likely discourage many would-be stakers from putting in too much of their value into the staking process, which reduces the security of the consensus process.  Compare this to a PoW system like Bitcoin, where even if the largest stake holder (presumably Satoshi Nakamoto) were to come into the system now, there would be nothing that he could do to affect the system stability directly.  The only thing which is in his power to do would be to sell off his large hoard of coins, into the market and depress the price of the coin.  This is a perfectly legal and valid activity from the free market perspective, and the size of his stake had no direct bearing in his ability to harm or profit directly from the system itself.  This is exactly the same reason why hard money advocates sing the praises of the benefits of gold over fiat currencies.  A large holder in gold has very little influence over the gold mining industry.  There is one argument that examines the risk of a large holder in gold paying off the gold miners not to mine, and we will address this particular criticism later on.

A secondary issue with the whale problem is that when an actor who has a large stake in the system, if caught attempting to defraud the system, will lose only their staked amount.  This means that an actor with a very large pool of coins can statistically always win over those with less stake.  This is similar to a game of Texas Hold’em poker where going ‘all-in’ is not permitted.  Basically the whale on the table only needs to out-bet his competitors by the minimal amount in order to ensure that he continues to maintain (and increase) his lead over the others.  Of course in this case you don’t win the stakes themselves but only the fees of the processed transactions in the block, though the premise is the same.  Additionally, if you were to blatantly commit fraud somehow either by filtering transactions that do not pay you or your conspirators, or by deliberately not relaying some transactions and you are caught, you only lose your stake, and are free to continue to try again next time with a new stake.  Compare this to a PoW mining pool which is caught in act of outright fraud; they would lose all their members immediately and would be forced out of business.  This is the situation I mentioned above where a rich gold holder pays a mining company not to mine, which of course we have not seen successfully employed in the real world.

Defenders of PoS will claim that they will and can enact rules into the system that would punish those who break the rules so as to provide enough of a deterrent to these would-be bad actors from doing so.  Even if that were true, (which once again, would be a remarkable breakthrough in legal and political systems that have yet to be solved in real life) that inevitably mixes the monetary system with the legislative, judicial and enforcement systems.  If we have a hard time agreeing on making small changes in just the economic rules of a cryptocurrency, then I don’t have much faith in the ability of a couple of math nerds to come up with the right rules of criminal justice.  And even if they did manage to come up with a perfect set of rules, we have already devolved our system into one that relies on a central body (the developers) to make the rules.  To say that a PoS system can come up with a set of rules to make sure people act fairly is to give up on the notion of a decentralized currency completely.  

There is a very clear delineation between the things that the developers of Bitcoin need to deliberate on (what size of the block to use, what confirm cycle time to use) and those of what a PoS system must decide on (how to detect, determine guilt and punish those who stake and defraud the network) An analogy would be that one is tasked with deciding on how wide to make the roads and railway tracks for practical reasons, while the other is tasked on deciding what is illegal and what rights of the participants in the system must be protected, and how so.  To mix these into the same bucket is to ignore the fundamental socio-political issues surrounding PoS staking.

The criticisms of PoW

Now that I have thoroughly elaborated on the criticisms of PoS, I shall turn to the common criticisms of PoW systems, which have been so emphasized by many media outlets, that they should come to no surprise to the reader to see them represented yet again.

PoW mining pools breeds centralization

Many people will say that due to the centralization of mining pools, this creates a centralized PoW system.  (We will assume for the moment that all proof of work algorithms will inevitably centralize for the sake of debate).  The truth is yes, while PoW does not guarantee the system to be free of centralization, much like the gold mining cartels of yore, if a magnate gold tycoon were to buy up all the mining companies they would indeed enjoy a monopoly over the production of gold, and thus the money.  But if that were indeed true in theory, then why did it not happen in our history?  Surely we had enough time since the onset of modern civilization to observe this happening if it indeed was possible.  Perhaps it was actually attempted several times in the past, but it failed and thus we never heard of it.  A clue to why it doesn’t happen can be seen in the diamond industry.  DeBeers owns a monopoly on the mining and sale of diamonds and that has severely limited it’s use as a money. Nobody wants to hold too much ‘storage value’ in a medium which has one controlling party at the reigns.  Correction, that’s exactly what we have with the Federal Reserve Note.  The difference is that with fiat we have the government’s legal tender laws forcing our acceptance of it.  So we can see that centralization of control of a commodity money will destroy its value and thus its use as a money.  PoS defenders however will rightly say that although it has never happened, it cannot be mathematically proven that it cannot happen in the future.  This is a constant source of debate between the mathematicians and the economists.  Take for example, the historical fact that we don’t need to prove that hyperinflation can happen to know that it will happen given the right conditions.  The systems in economics depend on the subjective behaviour of billions of individual actors, and to assume that we would be able to accurately model them with any degree of accuracy is a fool’s bet (at least given current computational resources).  To say that it cannot happen because we cannot prove that it will is an mistake.

PoW doesn’t solve the problem of centralizing powers, but it at least decouples the miners so that they are incentivized only to keep their business running.  If they sellout and defraud the network, then miners lose their users.  Significantly, mining pools are businesses.  These businesses exist to turn a profit (whether in Bitcoin or fiat).  If a business is found to be a bad actor, there is an extremely effective deterrent that has been employed over the centuries that has proven more effective than any government regulation ever could: the boycott.  Pool operators are businesses with clients.  Their clients are the actual miners.  If the pool operator ‘sells-out’ to a bad actor, for instance, by leasing out or lending their hashing power to a secret party for the purpose of a 51% attack, then they risk losing all of their clients when they are found out.  Indeed they would be incentivized to keep the value of the coin as high as possible in order to profit from the fees they are collecting.  The key here though, is that they are running a for-profit business.  In a PoS system, the large staker may be an individual, and has no business model or revenue stream to protect.  In addition, they can recover from a failed attempt to defraud the network and try again later on, losing only their staked portion for the failed attempt.  From the perspective of the miner/staker, the risk of defrauding the network is much greater for the miner of a PoW system, as it is represented by the capital investment in their mining farm hardware (paid for by external fiat money), and the future revenue stream in the fees.  For the PoS staker, it is just the amount of in-network coins that they have presently staked.  It doesn’t take a lot of analysis to conclude that a staker will have much less at risk than a large miner when trying to defraud the network.

PoW isn’t perfect solution, but at least it is one that has been shown to work historically in the past with gold.  We know that commodity money can become the world reserve currency on its own merit alone.  That is, at least until a government comes along and makes it illegal and forces us to use their paper fiat money instead.

Externalities

In conclusion, the differences between PoS and PoW boils down to one of externalities.  In a PoS system the costs and rewards are internal, while in a PoW system the costs are external, while the rewards internal.  This complete disconnect with the outside world found in a PoS system lends to dishonest gaming due to ‘free simulation’ (it costs nothing or very little to attempt to game the staking process in your favour), and an incentive system that rewards those who have ample resources in the system more than those who have scant resources.  PoS hardliners and I agree on one thing, which is that PoS systems tightly couples the stakers with the health and welfare of the system, while in PoW the miners are somewhat isolated from the politics of the system and are driven only by for-profit motivations.  Where we disagree is that I believe that this separation is what keeps the number of bad actors in PoW miners to a minimum.  They will not do anything that would serve to undermine their future revenue stream of their mining business.  In comparison, the tight coupling of the PoS staker to the network and his individual influence within it incentivizes him to manipulate the system to increase their own stake and thus power within the network.  Thus PoS runs up against the exact sociological problems that we experience in present day political/corporate systems.  Though they argue that they will be able to contrive rules and punishments in the system to deter any such bad behaviour, (indeed the exact behaviour which a PoS system implicitly encourages if a rational economic actor were to try to maximize their profits and stake) we have seen that no satisfactory system of governance has ever been developed to control corruption in the real world, and the simple fact that we have to create governance rules in the system itself implies that the developers have central control of the system and can be bribed or corrupted themselves by the bad actors.  (Or a worse, and more likely scenario is that the large stakeholders in the system are the developers themselves).  This is essentially why I do not see any possible future where a PoS system can become a global money system.  PoS systems may enjoy some usefulness (and thus their coins some inherent use value) as an application coin, but by no means I see a PoS or a stake based coin ever becoming accepted as a universal currency.  The reasons for which are not technical, nor mathematical, and need not be proven.  They are economical in nature and in such things, as in those relating to human nature, history is the best predictor.

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