Proof of Work (POW)

What is Proof of Work (POW) ?

Bild von Gerd Altmann auf Pixabay

What is Proof of Work (POW) ?

Originally from 1993, the proof-of-work concept was developed to prevent denial-of-service attacks and other service misuse, such as spam, on a network by requiring some work from the service user. The work requested is usually processing time by a computer.

In 2009, Bitcoin introduced an innovative method to use proof of work as a consensus algorithm used to validate transactions and transfer new blocks to the blockchain.

This has finally developed into a widespread consensus procedure in many different cryptocurrencies.

How does it work?

In short, miners in a network compete against each other to solve complex computing tasks. While the puzzles are difficult to solve, checking whether the solution is correct is easy. Once a miner has found the solution to the puzzle, he can send the block to the network, where all other miners can then check whether the solution is correct.

Let’s take an example.

Bitcoin is a blockchain-based system that is maintained through the collaboration of decentralized nodes. Some of these nodes are referred to as miners and are responsible for adding new blocks to the blockchain. To do this, the miners must try to guess a random number (nonce). This number, when combined with the data specified in the block and used in a hash function, must provide a result that meets the given conditions, e.g. a hash starting with four zeros. If a matching result is found, the other nodes check the validity of the result and the miner node is rewarded with the block bonus.

It is therefore impossible to add a new block to the main chain without first finding a valid nonce, which in turn creates the solution of a specific block (block hash). Each validated block contains a block hash that represents the work done by the miner, so it is called a proof-of-work.

Proof of Work helps protect the network from numerous different attacks. A successful attack would require a lot of computing power and a lot of time for the calculations and would therefore be inefficient. The costs would be greater than the potential benefits of attacking the network.

One problem with proof of work is that mining requires expensive computer hardware that consumes a lot of power. In addition, it is no longer used beyond complicated algorithm calculations to ensure the security of the network.

Although proof of work may not be the most efficient solution, it is still one of the most popular ways to reach consensus in blockchains. There are already alternative methods and approaches to solve the problems, but only time will tell which method will be the successor to proof-of-work.

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