(On Legitimacy of Blockchains - 7)
I would like to also mention the pros and cons of yet another means of consensus called PoS (Proof of Stake). One major advantage of PoS over PoW is that it hardly requires any more power consumption to maintain the blockchain than to participate in other activities on the internet (e.g. visiting websites, chatting, streaming videos, trading stocks, etc). It is because nodes in a PoS network simply "stake" their financial assets as means of assigning credit to each transactional block instead of undertaking massive computational operations. This is a good news not only in terms of energy efficiency, but also in terms of keeping transaction fees at a reasonable level.
PoS, however, creates even greater risks of plutocracy than PoW because money alone is the sole factor in determining the authenticity of transactions here. If rich nodes are allowed to stake incomparably high sums of cryptocurrency during each staking process, they can effectively dominate the administrative authority of the entire blockchain.
Of course, there are numerous methods to prevent this kind of mischief. The maximum amount of currency which can be staked by each individual node can have its own limit, and there could also be a pseudo-random allocation algorithm which forces nodes to stake only for randomly assigned blocks instead of just letting them choose their own. Furthermore, the blockchain itself could be divided into separate "shards" so as to discourage stakers from establishing some kind of "staking monopoly" over the entire blockchain.
Even such a set of clever solutions, however, won't completely fix the problem of plutocracy in a PoS blockchain because anyone who owns an inexplicably huge sum of money can just create an extremely high number of nodes, each of which still has more balance to stake than the majority of other nodes. If the number of nodes is sufficiently large, even sharding and random allocation will fail to completely prevent the eventual dominance of a single body of capital.