Proof of Work

Proof of Work (PoW) is a consensus algorithm used for preventing the 51% attack or double-spends. Cryptocurrency like Bitcoin is using the PoW consensus to confirm transactions and produce new blocks added to the chain. With PoW, miners compete to complete transactions on the network in exchange for a reward for their speed and accuracy.

 

The Key Takeaways:

  • Understanding the concept of Proof of Work and how it’s being used to secure the blockchain network.
  • Finding out what are the mathematical problems the miners are actually solving and how impactful does these calculations contribute to the society as a whole.
  • Get to know who’s involved in the mining process using the Proof of Work consensus.
  • Knowing which cryptocurrencies that are still rely on Proof of Work and why Ethereum chooses to hard fork to Ethereum 2.0.
  • Get a holistic view as to why Proof of Stake consensus is more secure and fairer than Proof of Work.

 

How Is Proof of Work Applied on Blockchain?

The blockchain Proof-of-Work consensus algorithm is the oldest consensus mechanism and the most popular algorithm. Of course, there are many reasons that may have contributed to its popularity. But the primary rationale for its reputation is its capability to promote honesty in the decentralized ecosystem. Though there may be other algorithms, PoW is still sustainable to attain the Byzantine Fault Tolerance (BFT) objective. 

To fully comprehend what BFT is all about, it is a system capable of withstanding failures associated with the Byzantine Generals’ Problem. That means a network can avoid situations where some nodes (or miners) attempt to act against the consensus. With the help of the BFT characteristics, the PoW algorithm works in such a way so that nodes can validate a block within a network by solving a complex mathematical problem.

While the first one to get the solution to the mathematical problem receives the consensus permission to choose a block to add to the blockchain. As an exchange, the successful node gets the tokens as a reward. For example, in the Bitcoin network, the reward is in BTC.

In the end, the PoW consensus creates a relatively healthy and transparent closed economy. Mainly to encourage users to continue to sustain the ecosystem.

 

What Mathematical Problems are Involved in PoW?

These complex mathematical problems refer to a diversity of uncommon arithmetic complications. On top of that, these problems require plenty of computational power to solve.

It ranges from the Byzantine generic problems to the intricate hashing function. For instance:

  • hash function involves a process to generate a randomized output with a specific length through an input. While a hash is a numerical value (or target) that decides who mine the block accurately.
  • Solving an integer factorization comprising a composite number’s decomposition into smaller integers in conjunction with the prime number restrictions and multiplications.
  • It serves as a contingency puzzle protocol to secure the network in a DoS attack that requires a defined order. Instead of solving a function, it’s more of sourcing the root cause.

So, for every successful validation of a block, a reward is given to compensate for the effort. However, the scalability and security is the main challenge as a network grows. And hash power grows parallel to the complexity of the puzzles. As a result, Proof of Stake was introduced to counter the flaws Proof of Work possesses.