The Thorn in Proof of Stake

A while back I was researching into cryptos that costed less than a penny as a low barrier method to diversification and to learn more about their unique values and selling points. One crypto that caught my eye was mintcoin.

On the surface, this coin sounded too good to be true. It's dirt cheap to buy with even cheaper fees to transfer without the bitcoin waiting. Granted it's user base is small so it is not as widely accepted as the bigger coins but if it's cheap, it got room to grow.

The big differentiation was their proof of stake as a way to mint out a coin instead of using computing power to mine one. By putting your coins at stake for other transactions, You use less eletricity, have less wear and tear on your computer and disrupts the application specific integrated circuit (ASIC) miners from gaining a majority share of these coins. But herein lies the problem, You need those coins to get started in minting.... a lot of it...

While the idea of disrupting the ASIC miners from owning majority shares through brute hashing, the race to stake and mint coins in the Proof of Stake method means you need to be a major holder to see any "probable" returns. And from here it goes down a very slippery slope.

When you don't have a lot, your chances of minting is slim. With no future returns, withdrawing occurs as the funds are put to better use. Less people use mean the hoarders will exponentially gain more coins through cheap buying and/or minting. Ultimately, you have a select club of big whales with small coins... that nobody else is encouraged to hold or even use.

In the original Satoshi vision, cryptocurrencies was to be an equalizer in the financial space and the Proof of Stake concept was originally designed to derail those who hoard by means of technical prowess. But it all went wrong when there was no measurable rewards for staking meaning those who are rich, stays rich.

And as a low cost cryptocurrency, the feeling of abject poverty with no way out hits too close to home.