Could Proof of Stake Ethereum Become Fiat v2.0?

Most of us have at least a rudimentary understanding of how the Fiat financial system works for the few, and how central banks across the globe are able to create money out of nothing.

Printing more currency in this manner devalues existing currency by causing inflation, if the new money hits the market at a high enough velocity. Simply put, the more abundant something there is, the less it is intrinsically worth.

Alt currencies provide an attractive alternative to Fiat currencies largely because they rely on a proof of work model which limits the rate at which new coins can be generated. Many coins also have a max supply cap, Bitcoin for example is capped at a 21 million Bitcoins.

If Bitcoin use ever became widespread, many people theorise that deflation would devalue it to the point of destruction.

Fortunately because the limited nature of Bitcoin is common knowledge, people tend to HODL, maintaining its value.

Ethereum is different, Vitalik Buterin has already stated that issuance will not be hard capped, but will instead be limited to 26% a year.

Ethereum To Switch From Proof Of Work to Proof Of Stake By Nov 2017

 
There are currently around 91,018,773.78 Ethereum coins in existance, valued at $344.38045584 each at the time of writing, this means that all Ethereum presently in existance is valued at $31,345,086,804.35

Up to 23664870.7828 new coins could be generated each year under the new proof of stake system but even this amount is very unlikely to cause inflation. Why? Because proof of stake will require users to lock up around 32 Ethereum per master node, in order to generate new Ethereum as a reward.

With Ethereum prices continuously increasing due to low supply and high demand, a high percentage of new coins will simply be reinvested, perpetuating the increase of value.

Pools will still exist, allowing those with smaller stakes to get a piece of the action, but switching from POW to POS seems to me like Ethereum are creating the perfect environment for an oligarchy of rich investors to thrive in.