Good point. Does that consider that case where the economic value of running the PoW is part of the network itself, as say running an Ethereum app? For the miners the PoW wouldn't be valuable, but instead of burning computation time the byproduct could be useful part of the network.
With Ethereum contracts the cost of validation is expensive, and for proof of work you need a function that is expensive to run, but cheap to verify (the inverse of SHA-256 is such a function).
The main concern against proof of stake is what you just described actually: it doesn't cost money to create, but as the value of staking is part of the cryptocurrency, a malicious party could get and stake of a lot of that cryptocurrency, create a leveraged short contract to protect itself, then reverse the transaction.
Another example would be using protein folding for cancer research for example, which sounds a noble cause, but it creates an incentive for drug companies to be miners, and could lead to even bigger centralization of mining than what is already happening.
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Does this enable using PoW to run something like Ethereum VM/contracts?
The security of proof of work algorithm depends on the execution not having an economical value (and actually cost a mostly fixed amount of work).
Good point. Does that consider that case where the economic value of running the PoW is part of the network itself, as say running an Ethereum app? For the miners the PoW wouldn't be valuable, but instead of burning computation time the byproduct could be useful part of the network.
With Ethereum contracts the cost of validation is expensive, and for proof of work you need a function that is expensive to run, but cheap to verify (the inverse of SHA-256 is such a function).
The main concern against proof of stake is what you just described actually: it doesn't cost money to create, but as the value of staking is part of the cryptocurrency, a malicious party could get and stake of a lot of that cryptocurrency, create a leveraged short contract to protect itself, then reverse the transaction.
Another example would be using protein folding for cancer research for example, which sounds a noble cause, but it creates an incentive for drug companies to be miners, and could lead to even bigger centralization of mining than what is already happening.